1. For each of the following scenarios explain, with the aid of an IS-LM diagram, what happens to equilibrium output and the real interest, ceteris-paribus. (a) Government spending falls. (b) Autonomous consumption increases. (c) Government lovgers the effective tax rate on capital. (d) There's a major credit scandal. (e) Financial analysts predict that inflation will be higher next year.

1. For each of the following scenarios explain, with the aid of an IS-LM diagram, what happens to equilibrium output and the real interest, ceteris-paribus. (a) Government spending falls. (b) Autonomous consumption increases. (c) Government lovgers the effective tax rate on capital. (d) There's a major credit scandal. (e) Financial analysts predict that inflation will be higher next year.

ECON MICRO

5th Edition

ISBN:9781337000536

Author:William A. McEachern

Publisher:William A. McEachern

Chapter13: Capital, Interest, Entrepreneurship, And Corporate Finance

Section: Chapter Questions

Problem 1.1P

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