Looking at the same site as you used in Question 1, www.fgn.unisg.ch/eurmacro/tutor/islm.html, the exogenous parameters in this

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Looking at the same site as you used in Question 1, www.fgn.unisg.ch/eurmacro/tutor/islm.html, the exogenous parameters in this simulation are the MPC (c), the sensitivity of money demand to income (k), the sensitivity of money demand to the interest rate (h), and the sensitivity of investment to the interest rate (b). For each of these parameters, explain what happens in the ISLM graph when they are increased. What happens to the equilibrium output and the equilibrium level of the interest rate?

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Related Book For  book-img-for-question

The Economics Of Money Banking And Financial Markets

ISBN: 9780321584717

4th Canadian Edition

Authors: Frederic S. Mishkin, Apostolos Serletis

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