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Unformatted text preview: Question Four What will happen to the IS curve if the expected future marginal product of capital MPK f declines. Explain using diagrams. Question Five What will happen to the LM curve if there is an increase in M, the nominal money supply? Explain using diagrams. Question Six EC 202(01) - Assignment # 3 - S10 2 Suppose that initially the economy is in general equilibrium in the classical model. Describe the effects of a beneficial supply shock. Question Seven What will happen to the IS curve if there is a decrease in G (other things being equal including Y)?...
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