(a) Derive the IS curve from Savings-Investment figure. Explain all the steps.

(a) Derive the IS curve from Savings-Investment figure. Explain all the steps.

Show using the IS-LM figure what happens to real interest rate, output and prices in each of the following scenarios in the short-run and the long-run.

(b) Real money supply increases

(c)A temporary increase in government purchases for military purposes. Will it matter whether the temporary increase in military spending is funded by taxes or by borrowing?