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Using the IS-LM, graph and explain what happens if w increase government spending and decrease the money supply. Make sure to include the Money...

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A. Using the IS-LM, graph and explain what happens if w increase government spending and decrease the money supply. Make sure to include the Money graph and the Keynesian Cross. B. Using the IS-LM, graph and explain the eFects of an increase in the value of the dollar. C. Using the IS-LM, graph and explain the eFect of a decrease in government spending of $700 trillion dollar and a MPC of .80. D. Assume the economy is represented by the following equaTons Money demand = 6y-120r Money supply = 5400 Y = C + I + G C = 180 + .7 (Y-±) ± = 400 I = 100 – 18r + .1 Y G = 400 A. Solve for equilibrium in the goods market (in terms of income). B. Solve for equilibrium in the ²nancial market (in terms of interest rates). C. Solve for the equilibrium interest rate. D. At this equilibrium what is the level of consumpTon and investment. E. What happens if G increase by 10 to become 410? How does this impact Investment?
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IS LM.doc

A. An increase in the government and decrease in the money supply will lead in contracting money
supply curve to M1. In addition, the LM would move to LM2 due to the increase in the overall...

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