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Hello guys, could you give your best solution to this (it doesn't need to be perfect), but even the start would help... (6p) Suppose you have the following ISLM model (r- rate of interest; y= aggregate output) depicted in Figure Fexl below. Explain as precisely as you can the assumptions behind the model. Suppose the roles of the curves are reversed. How would you explain the model now? Is fiscal policy effective in the first case (i.e., the case described in the Figure)? IScurve LM curve Fig.Fex1. ISLM model. 

          Hello guys, could you give your best solution to this (it doesn't need to be perfect), but even the start would help...
(6p) Suppose you have the following ISLM model (r- rate of interest; y= aggregate output) depicted in Figure Fexl below. Explain as precisely as you can the assumptions behind the model. Suppose the roles of the curves are reversed. How would you explain the model now? Is fiscal policy effective in the first case (i.e., the case described in the Figure)?
IScurve
LM curve
Fig.Fex1. ISLM model.
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hello guys could you give your best solution to this it doesnt need to be perfect but even the start would help 6p suppose you have the following islm model r rate of interest y aggregate ou 63362

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Principles of Economics
Principles of Economics
Gregory Mankiw 8th Edition
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Hello guys, could you give your best solution to this (it doesn't need to be perfect), but even the start would help... (6p) Suppose you have the following ISLM model (r- rate of interest; y= aggregate output) depicted in Figure Fexl below. Explain as precisely as you can the assumptions behind the model. Suppose the roles of the curves are reversed. How would you explain the model now? Is fiscal policy effective in the first case (i.e., the case described in the Figure)? IScurve LM curve Fig.Fex1. ISLM model.
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Transcript

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00:01 Beginning in long run equilibrium, where output is at the natural level.
00:27 If the fed increases the money supply, this will cause the economy to go through an expansionary phase.
01:04 Starting with the islm model, an increase in the money supply will shift the lm curve to the right, resulting in a lower interest rate and higher level of output.
02:00 In the long run, the price level will rise, real money balances will decline, and the lm curve will shift back to its original position...
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