Question
Using the IS-LM-FE model, analyze the impact of the following events in the short and long run (you may assume each is permanent): Please note
Using the IS-LM-FE model, analyze the impact of the following events in the short and long run (you may assume each is permanent):
Please note that diagrams are required for each answer and grades are assigned based on the depth and quality of the explanation provided.
a) An increase in the purchase price of capital.
b) A simultaneous and equal increase in government purchases (G) and taxes.
c) A simultaneous increase in government purchases and the money supply.
d) A significant increase in the price of oil.
e) An expected increase in GDP in the future.
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