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The IS LM analysis is critical in establishing the relationship between the level of income and rate of interest at which both the commodity market
The IS LM analysis is critical in establishing the relationship between the level of income and rate of interest at which both the commodity market and money market will be in equilibrium. Using suitable diagrams, explain how the following changes would affect the equilibrium position holding everything else constant.
i. An increase in the government taxes. (5 marks)
ii. A decrease in the money supply (5 marks)
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