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Use the IS-LM and AD-AS diagrams to analyze the effects of the following events onequilibrium (i) output, (ii) interest rates, and (iii) prices, assuming that
Use the IS-LM and AD-AS diagrams to analyze the effects of the following events onequilibrium (i) output, (ii) interest rates, and (iii) prices, assuming that all curves havenormalshapes.
- [ 6 points]An increase in the marginal propensity to consume out of disposable income.
- [ 6 points]Introduction of financial regulations that increase the demand for liquidity.
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