Part II: Free Response (20 points) 1.) IS-LM a.) Draw and label the IS-LM curve in equilibrium. b.) Show the change in the IS-LM curve
Part II: Free Response (20 points) 1.) IS-LM a.) Draw and label the IS-LM curve in equilibrium. b.) Show the change in the IS-LM curve with an expansionary fiscal policy (increase in government spending). What happened to rand Y? c.) What would the Fed do with monetary policy if it wanted to lessen the crowding out effect? Show the resulting shift in the IS-LM curve. What happened to r and Y
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access with AI-Powered Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
