Westeros has recently discovered a new technology that would potentially increase profit for most firms. As a result, investment increases. a. In a Keynesian cross model, graph the changes and predict what will happen to equilibrium GDP. b.What happens to the IS curve? Will it shift or will there be a movement along the curve? Graph it and explain. c. In an IS-LM model, using the same graph, predict what happens to the equilibrium interest rate and GDP.

Westeros has recently discovered a new technology that would potentially increase profit for most firms. As a result, investment increases. a. In a Keynesian cross model, graph the changes and predict what will happen to equilibrium GDP. b.What happens to the IS curve? Will it shift or will there be a movement along the curve? Graph it and explain. c. In an IS-LM model, using the same graph, predict what happens to the equilibrium interest rate and GDP.

MACROECONOMICS

14th Edition

ISBN:9781337794985

Author:Baumol

Publisher:Baumol

Chapter9: Demand-side Equilibrium: Unemployment Or Inflation?

Section: Chapter Questions

Problem 3TY

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