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2. The AA schedule and its shift a. Write down the AA schedule as an equation. MS/ P = L(R* + Ee/ E-1, y) b.

2. The AA schedule and its shift a. Write down the AA schedule as an equation. MS/ P = L(R* + Ee/ E-1, y) b. Show in which direction the AA schedule will shift in response to an increase in each exogenous variable. Show how E, Y, and CA will change. (Fill in the following box.) M P R* Fe Increase in money demand AA shifts R/L R R AA shifts left AE (TL) AY ( TV ) ACA (TI)

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