Westeros has recently discovered a new technology that would potentially increase profit for most firms. As a result, investment increases. a. In a Keynesian cross model, graph the changes and predict what will happen to equilibrium GDP. b.What happens to the IS curve? Will it shift or will there be a movement along the curve? Graph it and explain. c. In an IS-LM model, using the same graph, predict what happens to the equilibrium interest rate and GDP.
Westeros has recently discovered a new technology that would potentially increase profit for most firms. As a result, investment increases. a. In a Keynesian cross model, graph the changes and predict what will happen to equilibrium GDP. b.What happens to the IS curve? Will it shift or will there be a movement along the curve? Graph it and explain. c. In an IS-LM model, using the same graph, predict what happens to the equilibrium interest rate and GDP.
Chapter9: Demand-side Equilibrium: Unemployment Or Inflation?
Section: Chapter Questions
Problem 3TY
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