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Suppose the Federal Reserve has decided to implement contractionary monetary policy, which decreases the money supply. How would this affect the IS-LM model? Demonstrate the

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Suppose the Federal Reserve has decided to implement contractionary monetary policy, which decreases the money supply. How would this affect the IS-LM model? Demonstrate the effect by adjusting the graph. Regarding the variables in the graph,Ystands for aggregate output, or aggregate income, andrstands for interest rates. IS refers to the IS curve and LM refers to the LM curve.

image text in transcribed

image text in transcribed

\fSuppose the Federal Reserve has decided to implement contractionary monetary policy, which decreases the money supply. How would this affect the 1&LM model? Demonstrate the effect by adjusting the graph. Regarding the variables in the graph, Y stands for aggregate output, or aggregate income, and 1' stands for interest rates. IS refers to the IS curve and LM refers to the LM curve. Interest rate. r

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