I have to analyze, using the IS-LM model, the macroeconomic effects of an increase in savings in the short term and its implications for long-term growth. Specifically, I have to suppose that households (consumers) lose confidence and start saving more for any level of disposable income. Can you plase answer the following question (using graphs too): In terms of total savings and, therefore, of potential long-term growth, is a flat LM curve or a positive sloping LM curve better

Principles of Economics 2e
2nd Edition
ISBN:9781947172364
Author:Steven A. Greenlaw; David Shapiro
Publisher:Steven A. Greenlaw; David Shapiro
Chapter24: The Aggregate Demand/aggregate Supply Model
Section: Chapter Questions
Problem 32RQ: How is long-term growth illustrated in an AD/AS model?
icon
Related questions
Question

I have to analyze, using the IS-LM model, the macroeconomic
effects of an increase in savings in the short term and its implications for long-term growth. Specifically, I have to suppose that households (consumers) lose confidence and start saving more for any level of disposable income.

Can you plase answer the following question (using graphs too):

In terms of total savings and, therefore, of potential long-term growth, is a flat LM curve or a positive sloping LM curve better?

Expert Solution
steps

Step by step

Solved in 4 steps with 3 images

Blurred answer
Knowledge Booster
Total Cost
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, economics and related others by exploring similar questions and additional content below.
Similar questions
  • SEE MORE QUESTIONS
Recommended textbooks for you
Principles of Economics 2e
Principles of Economics 2e
Economics
ISBN:
9781947172364
Author:
Steven A. Greenlaw; David Shapiro
Publisher:
OpenStax