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(b) Under our standard assumptions, how are consumption and investment affected by changes in the interest rate? Negatively (c) Suppose consumption and investment are very

(b) Under our standard assumptions, how are consumption and investment affected by changes in the interest rate? Negatively (c) Suppose consumption and investment are very sensitive to changes in the interest rate. How will this affect the slope of the IS curve? What is the economic intuition? Graphically derive the AD curve in this case

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