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is-lm model The Reserve Bank.faces.pressure.to.begin .tightening.monetary policy.as.the.cost.of. living.continues to rise. .Using.the.IS-LM.model, .explain the.effects.of a.contractionary. monetary policy.on output.and the.interest rate. .How.should.fiscal policy .respond .if the. government.wishes.to

is-lm model

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The Reserve Bank.faces.pressure.to.begin .tightening.monetary policy.as.the.cost.of. living.continues to rise. .Using.the.IS-LM.model, .explain the.effects.of a.contractionary. monetary policy.on output.and the.interest rate. .How.should.fiscal policy .respond .if the. government.wishes.to keep output.at.its.current.level?.If.money.demand.becomes.more. sensitive.to the.interest rate, should.the.fiscal.response.be.stronger or.weaker.to. maintain the current output.level?.T

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