Assume that the demand for money is given by: L = kY -hi and that the central bank allows the money supply to adjust in order to maintain a given interest rate. If income increases from YO to Y1 what will the resulting Im curve look like, assuming that the central bank maintains its policy of keeping the interest rate at an unchanged level?

Assume that the demand for money is given by: L = kY -hi and that the central bank allows the money supply to adjust in order to maintain a given interest rate. If income increases from YO to Y1 what will the resulting Im curve look like, assuming that the central bank maintains its policy of keeping the interest rate at an unchanged level?

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Question

Assume that the demand for money is given by: L = kY -hi and that the central bank allows
the money supply to adjust in order to maintain a given interest rate. If income increases
from YO to Y1 what will the resulting Im curve look like, assuming that the central bank
maintains its policy of keeping the interest rate at an unchanged level?

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