1. For each of the following scenarios explain, with the aid of an IS-LM diagram, what happens to equilibrium output and the real interest, ceteris-paribus. (a) Government spending falls. (b) Autonomous consumption increases. (c) Government lovgers the effective tax rate on capital. (d) There's a major credit scandal. (e) Financial analysts predict that inflation will be higher next year.

1. For each of the following scenarios explain, with the aid of an IS-LM diagram, what happens to equilibrium output and the real interest, ceteris-paribus. (a) Government spending falls. (b) Autonomous consumption increases. (c) Government lovgers the effective tax rate on capital. (d) There's a major credit scandal. (e) Financial analysts predict that inflation will be higher next year.

Principles of Economics 2e

2nd Edition

ISBN:9781947172364

Author:Steven A. Greenlaw; David Shapiro

Publisher:Steven A. Greenlaw; David Shapiro

Chapter19: The Macroeconomic Perspective

Section: Chapter Questions

Problem 5SCQ: According to Table 19.7, how often have recessions occurred since the end of World War II (1945)?

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