8) Goods Market: Asset Market:
o What are the IS and LM equations?
o Calculate and show the equilibrium output and interest rates?
o Considering a Keynesian Model, show graphically what happens to P, Y, and r in the SR when the there is an increased risk of the stock market changing the Money Demand by 25 regardless of Y or r.
o What is the short run Y and r?
o Suppose that the Fed would like to stabilize the economy. Show how large of a policy they would conduct.
o Compare the magnitudes of the Government’s policies if they use only a change in expenditure, only a change in taxes, or only a balanced budget policy
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