Based on Your Understanding of the IS-LM Model,graphically Illustrate and Explain

question 73

Essay

Based on your understanding of the IS-LM model,graphically illustrate and explain what effect a reduction in consumer confidence will have on output,the interest rate,and investment.

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Definitions:

Investment Line

A graphical representation showing the relationship between the level of investment and the rate of return or interest rate.

Income Axis

The vertical axis on a graph that represents different levels of income, commonly used in economics.

Vertical Axis

In a graph or chart, this is the y-axis, which typically shows the range of values for a dependent variable.

Horizontal Axis

In a graph, this axis typically represents the independent variable or the variable that is being manipulated or changed.