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In: Economics

Using the IS-LM model, analyze the effect of the following events on the economy. Show the...

Using the IS-LM model, analyze the effect of the following events on the economy. Show the graphs and explain the changes step-by-step (Example: Increase in tax rate => Lower disposable income => Lower Consumption => Lower AD => Lower output/income => Lower money demand => Lower interest rate).

  1. Due to the ongoing quarantine, the firms decreased autonomous investment.
  2. The government initiated a massive infrastructural improvement program.
  3. The Central bank increased its money supply.
  4. The technological revolution on the financial market eased access to the financial market for investors (this one is more complicated, but please be creative yet reasonable).  

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Expert Solution

Rahul Sunny answered 8 months ago
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