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The Economics of Money, Banking, and Financial Markets 10th Edition by Frederic Mishkin
Edition 10ISBN: 978-0132763646The Economics of Money, Banking, and Financial Markets 10th Edition by Frederic Mishkin
Edition 10ISBN: 978-0132763646 Exercise 24
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Suppose the MP curve is given as r = 2 + ? , and the IS curve is given as Y = 20 - 2 r.
a. Derive an expression for the AD curve, and draw a graph labeling points at ? = 0, ? = 4, and ? = 8.
b. Suppose that l increases to l = 2. Derive an expression for the new AD curve, and draw the new AD curve using the graph from part (a).
c. What does your answer to part (b) say about the relationship between a central bank's distaste for inflation and the slope of the AD curve?
Suppose the MP curve is given as r = 2 + ? , and the IS curve is given as Y = 20 - 2 r.
a. Derive an expression for the AD curve, and draw a graph labeling points at ? = 0, ? = 4, and ? = 8.
b. Suppose that l increases to l = 2. Derive an expression for the new AD curve, and draw the new AD curve using the graph from part (a).
c. What does your answer to part (b) say about the relationship between a central bank's distaste for inflation and the slope of the AD curve?
Explanation
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a. We can find an expression for the AD ...
The Economics of Money, Banking, and Financial Markets 10th Edition by Frederic Mishkin
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