Question: Use the IS-LM model to determine the effects of each of the following on the general equilibrium values of the real wage, employment, output, the

Use the IS-LM model to determine the effects of each of the following on the general equilibrium values of the real wage, employment, output, the real interest rate, consumption, investment, and the price level.
a. A reduction in the effective tax rate on capital that increases desired investment.
b. The expected rate of inflation rises.
c. An influx of working-age immigrants increases labour supply (ignore any other possible effects of increased population).
d. The introduction of automated teller machines reduces the demand for money.

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a The increase in desired investment shifts the IS curve up as shown in Fig 921 The price level rise... View full answer

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