Question
The country of Hicksonia can be accurately described using IS-LM graphs. Use the IS-LM model to predict the changes to investment, consumption, income and the
The country of Hicksonia can be accurately described using IS-LM graphs. Use the IS-LM model to predict the changes to investment, consumption, income and the interest rate in each of the following cases. Consider what the central bank could do in each case to maintain the interest rate at a constant level.
(a) The Hicksonians find a huge underground treasure cave, substantially increasing the average asset holdings in the country
b) A fall in consumer confidence causes people to save a larger fraction of theirincome
c)
The introduction of contactless credit and debit cards means that people carry less
Good graphs please
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