Business, 22.02.2021 19:20 znation1324
Using the IS-LM model, illustrate and predict the effects of each of the following shocks on income/output and the interest rate. Then, based off of your IS-LM model, illustrate the change in the AS/AD model, both in the SR and the LR. *Note: please place the graphs side-by-side AND explain your graphs for full credit.
a. Suppose numerous firms decide to upgrade their machinery and equipment.
b. Millions of people begin to listen to Dave Ramsey and start to purchase goods and services with cash instead of credit cards. Assume they are still purchasing the same amount of goods and services.
c. A direct competitor to Dave Ramsey, Mr. Moneybags, writes a best-seller entitled Retire Rich which convinces the public to increase the percentage of their income devoted to saving.
d. After a rocky start to 2016, suppose the stock market crashes.
e. The government increases purchases and income taxes by equal amounts.
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Using the IS-LM model, illustrate and predict the effects of each of the following shocks on income/...
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