MGEB06H3 Lecture Notes - Lecture 1: Money Supply, Real Interest Rate, Macroeconomics
5 Oct 2015
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Use the is-lm model to illustrate graphically and briefly explain the impact of these effects on output and real interest rate in the short-run. Suppose the economy is currently producing above its full (lr) capacity. Knowing that you are an expert in macroeconomics, government policy makers want you to suggest a policy that would bring the economy back to full-employment and, at the same time, does not allow the level of investment to decrease. Explain with the aid of one well labeled is-lm diagram. Interest rate targeting will lead to a larger change in output than money supply targeting if the economy experiences an increase in autonomous investment. is this statement true, false, or. Explain with the aid of one well labeled is-lm diagram (compare your answer to initial equilibrium).
