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QUESTION
Consider a closed-economy IS-LM model. Assume initially the economy is at medium run equilibrium.
Consider a closed-economy IS-LM model. Assume initially the economy is at medium run equilibrium. Discuss with the help of graphs the effects of a decrease in consumer sentiment for output, interest rates and price level in the short run as well as in the medium run. Be sure to explain how the economy transitions from short run to the medium run.
