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1. Consider the asset market and the AA schedule. Imagine the gure of the asset market model. In cases below, answer how the variables and
1. Consider the asset market and the AA schedule. Imagine the gure of the asset market model. In cases below, answer how the variables and curves below would change or shift. 1.a. Home nominal money supply MSH fell. Equilibrium E1 Decrease, Increase or No change Home rate of return curve! Leftward shift, Rightward shift, or No shift AA schedule! Leftward shift, Rightward shift, or No shift 1.b. PH fell. Answer how curves and a variable below would shift change. Home real money supply curve: Downward, Upward, No shift Home equilibrium interest rate: Decrease, Increase, No change AA schedule? Leftward, Rightward, No shift 1.c. Home output Y fell. Home real money demand curve: Downward, Upward, No shift Equilibrium exchange rate: Decrease, Increase, No change AA schedule! Leftward, Rightward, No shift
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