Consider an economy that begins in long-run equilibrium. Suppose
that there is a wave of pessimism that reduces investment demand at
any given real interest rate. That is, suppose that the investment
demand curve shifts down and to the left. Use the IS-LM diagram and
the aggregate supply - aggregate demand diagram to show how this
shift down of the investment demand curve affects the interest
rate, income, investment, the price level, consumption, and the
supply of real money balances...