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Use the IS-LM model to predict the short-run impact on the interest rate and output if the Fed pushes interest rates down at the same time that both consumption and investment fall due to a financial crisis. Illustrate your answer graphically. Be sure to label: i. the axes; ii. the curves; iii. the initial equilibrium; and iv. the direction the curves shift. Explain your answer in words.
Primary Market
The market where new securities are issued and bought directly from the issuing company, facilitating capital raising.
Auction Market
A marketplace where buyers and sellers enter bids and offers simultaneously; prices are determined through direct interaction of supply and demand.
Dealer Market
A financial market mechanism in which dealers buy and sell securities for their own accounts.
Money Market
A segment of the financial market where short-term financial instruments with high liquidity are traded.
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