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Impact of increase in government purchases using IS/LM/BP model.

Using the IS/LM/BP model, demonstrate the effect of each of the following changes. Assume that the economy is a small country with perfect capital mobility and a flexible exchange rate.

1) An increase in government purchases

2) An increase in the money supply

3) A fall in GDP in the rest of the world

4) An increase in the domestic price levelAn increase in tax rates

5) An increase in the domestic price level

 

Business Economics, Economics

  • Category:- Business Economics
  • Reference No.:- M921563

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