Short-run and long-run impacts of decrease in money supply

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Use the IS-LM/ AD-AS model to show the short-run and long-run impacts of a decrease in money supply (M) on the real interest rate (r), real GDP (Y), the unemployment rate, investment spending (I), consumption spending (C), the nominal money supply (M), the price level (P) and the real value of the money supply(M/P). You must present properly labeled (IS-LM and AD-AS diagrams to show the SR and LR effects. Initial equilibrium points should be labeled “A”; short-run equilibrium points should be labeled “B”; and the LR should be labeled “C”. Also, present individual time graphs such as the graphs I use in class to show the impacts on EACH of these variables over time. Again use the “A”, “B”, “C” convention.

Reference no: EM131097753

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