(1) Show the effect of the increase of M by the government using graphs. (Be careful...
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(1) Show the effect of the increase of M by the government using graphs. (Be careful about intersection points in the graphs.) (2) Using total differentiation, calculate the first (only LM), second (IS-LM) and third multiplier (AD-AS) of the increase of money supply on Y, dY/dm = ?, and demonstrate these multipliers in the graphs. (3) Now, assume that we are in the liquidity trap. Demonstrate the graphs and calculate dy/dm again. (4) How do you justify unconventional monetary policy such as quantitative eashing in this case? Show the change in equilibria in the IS-LM and AD-AS graph (1) Show the effect of the increase of M by the government using graphs. (Be careful about intersection points in the graphs.) (2) Using total differentiation, calculate the first (only LM), second (IS-LM) and third multiplier (AD-AS) of the increase of money supply on Y, dY/dm = ?, and demonstrate these multipliers in the graphs. (3) Now, assume that we are in the liquidity trap. Demonstrate the graphs and calculate dy/dm again. (4) How do you justify unconventional monetary policy such as quantitative eashing in this case? Show the change in equilibria in the IS-LM and AD-AS graph
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To properly address your questions it seems like youre referring to a macroeconomic framework involving the ISLM model and the ADAS model commonly used in analyzing the effects of monetary policy Howe... View the full answer
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