Use the IS–LM model to predict the short-run impact on the interest rate and output if the central bank pushes interest rates down at the same time that both consumption and investment fall due to a financial crisis. Illustrate your answer graphically. Be sure to label: the axes the curves the initial equilibrium the direction the curves shift.
Use the IS–LM model to predict the short-run impact on the interest rate and output if the central bank pushes interest rates down at the same time that both consumption and investment fall due to a financial crisis. Illustrate your answer graphically. Be sure to label: the axes the curves the initial equilibrium the direction the curves shift.
Chapter22: Aggregate Demand And Aggregate Supply
Section: Chapter Questions
Problem 8P
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Use the IS–LM model to predict the short-run impact on the interest rate and output if the central bank pushes interest rates down at the same time that both consumption and investment fall due to a financial crisis. Illustrate your answer graphically. Be sure to label:
the axes
the
the initial equilibrium
the direction the curves shift.
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