Q.14 Consider the following graph where we assume that p=y(Y-Y); y>0LMISIn the above modelA.Price adjust instantaneously to clear the goods marketВ.The IS curve will shift downwards to restore equilibrium at YC.both IS and LM will shift to restore equilibrium at YD.equilibrium cannot be achieved without Central bank interventionE.none of the above

In the above model, equilibrium is achieved by intersecting the IS and LM curves. Points of…

Answered: In the above model

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In the above model

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

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Question

Q.14 Consider the following graph where we assume that p=y(Y-Y); y>0
LM
IS
In the above model
A.
Price adjust instantaneously to clear the goods market
В.
The IS curve will shift downwards to restore equilibrium at Y
C.
both IS and LM will shift to restore equilibrium at Y
D.
equilibrium cannot be achieved without Central bank intervention
E.
none of the above

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