(A)Draw a Figure,using the Keynesian IS-LM Framework,of an Economy in Recession

question 92

Essay

(a)Draw a figure,using the Keynesian IS-LM framework,of an economy in recession.
(b)If the Fed's goal is to move output to its full-employment level,what should it do with monetary policy? What will happen to the real interest rate? What is the effect on the price level? Show the result in your diagram.
(c)Suppose the Fed decides to keep the money supply unchanged.How could the government use fiscal policy to move the economy to full employment? Show the result in your diagram.
(d)How does the real interest rate differ between parts (b)and (c)?

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Definitions:

Blink Reflex

An involuntary blinking of the eyelids elicited by stimulation of the cornea or by other stimuli that protects the eye from foreign bodies and bright light.

Tear Glands

Glands located around the eye that produce tears, which are necessary for lubricating the eyes and providing protection against irritants.

Rectal Temperatures

Body temperature measurements taken from the rectum, which are considered to be very accurate for assessing a person's core body temperature.

Rectal Mucosa

The lining of the rectum, which is sensitive to damage, disease, and the absorption of medications.