Draw the following four graphs with an economy experiencing an inflationary gap: money market, investment demand, aggregate demand and supply (with the LRAS), and the Phillips curve. Show what happens in the short-run on all three graphs when the central bank decreases the money supply.

Draw the following four graphs with an economy experiencing an inflationary gap: money market, investment demand, aggregate demand and supply (with the LRAS), and the Phillips curve. Show what happens in the short-run on all three graphs when the central bank decreases the money supply.

Economics (MindTap Course List)

13th Edition

ISBN:9781337617383

Author:Roger A. Arnold

Publisher:Roger A. Arnold

Chapter14: Money And The Economy

Section: Chapter Questions

Problem 3WNG

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b. Draw the following four graphs with an economy experiencing an inflationary gap: money market,
investment demand, aggregate demand and supply (with the LRAS), and the Phillips curve. Show
what happens in the short-run on all three graphs when the central bank decreases the money supply.

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