Question 6: (15 points) Let the IS and LM relations be given as in class but suppose that investment is now increasing in the interest
Question 6: (15 points) Let the IS and LM relations be given as in class but suppose that investment is now increasing in the interest rate i; that is, when i increases, I(Y, i) increases. All other functions and relations remain the same. a) (10 points) Graphically derive the IS curve using the graph for equilibrium in the goods market. (Hint: You should derive the IS curve by following steps similar to what we did in class, using information given in the question.) b) (5 points) Explain why, given the unusual assumption for investment, the IS curve is upward s10ping
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