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1.Answer the following questions assuming known IS and LM curves. a)Derive the associated aggregate demand ( AD ) curve. (5 marks) b)Why does it have

1.Answer the following questions assuming known IS and LM curves.

a)Derive the associated aggregate demand (AD) curve. (5 marks)

b)Why does it have a negative slope? (5 marks)

c)What is the effect of an increase in government spending on the AD curve?

(5 marks)

d)What is the effect of an increase in real money balances on the AD curve?

(5 marks)

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