Using the IS-LM model and the AD-AS diagram, explain how fluctuations in investors' "animal spirits" may...

Using the IS-LM model and the AD-AS diagram, explain how fluctuations in investors' "animal spirits" may cause business cycles. How would you expect prices and interest rates to behave over the business cycle in this case? (Hint: what would happen to investment demand if investors expected high returns?

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Rahul Sunny answered 1 year ago

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