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Drawing the money market equilibrium to show the effect of rise in income on the interest rate.

Assume that money market is initially in equilibrium i.e. M/P = L = kY + hi. Now assume government reduced taxes which rise equilibrium income (Y). Sketch a money market diagram to show the effect of increase in income on the interest rate.

Business Economics, Economics

  • Category:- Business Economics
  • Reference No.:- M921487

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