For each of the following events and assuming ceteris paribus, describe and explain conciselythe effects, if any, on the IS schedule and/or the LM schedule (or alternatively the MPschedule) and hence the output and real interest rate in equilibrium.a). Taxes fall.b). Government purchases fall but at the same time the central bank changes its policy to seta higher real interest rate at a given level of output than before.c). The demand for real money balances increases.d). Investment demand becomes less interest sensitive.

Note: Since we only answer up to 3 sub-parts, we’ll answer the first 3. Please resubmit the question…

Answered: For eachof the following events and…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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