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QUESTION
The response of investment to fiscal policy a.Using the IS-LM diagram, show the effects on output and the interest rate of a decrease in government...
2. The response of investment to fiscal policy a.Using the IS-LM diagram, show the effects on output and the interest rate of a decrease ingovernment spending. Can you tell what happens to investment? Why?Now consider the following IS-LM model: C=c0 +c1(Y–T)I=b0 +b1Y–b2iM / P = d1Y – d2i b.
