Question: Use Figure 4-4 to identify a point where each of the following situations occurs and how the economy will adjust: (a) Planned spending exceeds income

Use Figure 4-4 to identify a point where each of the following situations occurs and how the economy will adjust:
(a) Planned spending exceeds income and there is an excess supply of money
(b) Unintended inventory investment is positive and the real demand for money is less than the real supply of money
(c) Unintended inventory investment is negative and there is an excess demand for money
(d) Planned spending is less than income and the real demand for money exceeds the real supply of money

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a This situation is a point to the left of the IS and LM curves Planned spending exceeds income at any point to the left of the IS curve There is an e... View full answer

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