Refer to the IS-LM-BP model for an open economy. 7.1. Draw a diagram that typically illustrates the IS-LM-BP model, with the slope of the BP curve flatter than that of the LM curve. Label the axes properly and reflect equilibrium. 7.2. How was the LM curve derived and defined, what does the slope of the curve depend on and what changes in what variables will shift the curve to the right? 7.3. How was the IS curve derived and defined, what does the slope of the
Refer to the IS-LM-BP model for an open economy. 7.1. Draw a diagram that typically illustrates the IS-LM-BP model, with the slope of the BP curve flatter than that of the LM curve. Label the axes properly and reflect equilibrium. 7.2. How was the LM curve derived and defined, what does the slope of the curve depend on and what changes in what variables will shift the curve to the right? 7.3. How was the IS curve derived and defined, what does the slope of the
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Question
Refer to the IS-LM-BP model for an open economy.
7.1.
Draw a diagram that typically illustrates the IS-LM-BP model, with the
slope of the BP curve flatter than that of the LM curve. Label the axes
properly and reflect equilibrium.
7.2.
How was the LM curve derived and defined, what does the slope of the
curve depend on and what changes in what variables will shift the curve to
the right?
7.3.
How was the IS curve derived and defined, what does the slope of the
curve depend on and what changes in what variables will shift the curve?
7.4.
What does the B curve reflect and what do points on, below and above
the BP curve indicate?
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