Use the Keynesian-Cross Model to Illustrate Graphically the Impact of an Increase

question 7

Essay

Use the Keynesian-cross model to illustrate graphically the impact of an increase in the interest rate on the equilibrium level of income. Be sure to label: i. the axes; ii. the curves; iii. the initial equilibrium values; iv. the direction the curve shifts; and v. the terminal equilibrium values.
b. Explain in words what happens to equilibrium income as a result of the increase in the interest rate.

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Definitions:

Predicting Happiness

The attempt to foresee an individual's future emotional state or satisfaction with life based on various factors and conditions.

Learning Style

Refers to the preferred or most effective way an individual processes, absorbs, and retains new information and skills.

Distractions

Things that divert someone's attention from the task at hand.

Acrostics

A form of written puzzle, where the first letter, syllable or word of each line or paragraph, or other recurring feature in the text spells out a word or a message.