Econ110B_prob3_answers - in order to get ˜ Y back to...

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ECON 110B Problem Set 3 Solutions Grant E. Johnson and Eul Noh January 2016 Chapter 12, exercise 2 (page 336) The MP curve shifts down, which results in ˜ Y due to increased investment spending. Chapter 12, exercise 6 (pages 336-337) (a) The IS curve shifts to the left; the Fed should respond to this by lowering the MP curve in order to get ˜ Y back to zero. (b) The IS curve shifts to the right; the Fed should respond to this by raising the MP curve in order to get ˜ Y back to zero. (c) The IS curve shifts to the right; the Fed should respond to this by raising the MP curve
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Unformatted text preview: in order to get ˜ Y back to zero. (d) The IS curve shifts to the left; the Fed should respond to this by lowering the MP curve in order to get ˜ Y back to zero. (e) The IS curve shifts to the right; the Fed should respond to this by raising the MP curve in order to get ˜ Y back to zero. (f) The IS curve shifts to the left; the Fed should respond to this by lowering the MP curve in order to get ˜ Y back to zero. Chapter 12, exercise 12 (page 337-338) The answer to this exercise is in the textbook on pages 339-340. 1...
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