Question
Suppose the demand for real money balances depends on disposable income. That is, the money demand function is M/P = L ( r,Y - T
Suppose the demand for real money balances depends on disposable income. That is, the money demand function isM/P = L(r,Y - T).Using the IS-LM model,
a)Does this change to IS-LM affect the way changes in government expenditures impact Y and r? If so, how?
b)Does this change to IS-LM affect the way changes in taxes impact Y and r? If so, how?
Please explain it by using Graphs.Thanks
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Managerial Economics A Problem-Solving Approach
Authors: Luke M. Froeb, Brain T. Mccann
2nd Edition
B00BTM8FK0
