Question: Within the IS-LM model, show how income and the interest rate are affected by each of the following: a. An increase in government spending. b.

Within the IS-LM model, show how income and the interest rate are affected by each of the following:
a. An increase in government spending.
b. An autonomous decline in investment spending.
c. An increase in taxes.
d. An increase in the money supply
In each case, explain why the changes in income and the interest rate occur.

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a An increase in government spending will shift the IS schedule to the right income and the interest ... View full answer

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