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mankiw7e-chap10_Slides 1 to 14

mankiw7e-chap10_Slides 1 to 14 - 10 Aggregate Demand I...

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Aggregate Demand I: Building the IS IS- LM Model Model 10 10 In this chapter, you will learn: the IS curve, and its relation to: the Keynesian cross the LM curve, and its relation to: the theory of liquidity preference how the IS - LM model determines income and the interest rate in the short run when P is fixed Context Chapter 9 introduced the model of aggregate demand and aggregate supply. Long run prices flexible output determined by factors of production & technology unemployment equals its natural rate Short run prices fixed output determined by aggregate demand unemployment negatively related to output
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