Explore BrainMass
Share

Explore BrainMass

    IS-LM analysis/curves

    This content was COPIED from BrainMass.com - View the original, and get the already-completed solution here!

    Why does the government spend money surveying consumers and firms on their current level of confidence in the economy?

    How might the Federal Reserve react to a sudden drop in consumer confidence? Use IS-LM analysis (DRAW IT) and explain it to support your answer.

    © BrainMass Inc. brainmass.com April 3, 2020, 3:23 pm ad1c9bdddf
    https://brainmass.com/economics/aggregate-demand-and-supply/is-lm-analysis-curves-69904

    Solution Preview

    Answers

    The IS curve represents the product market equilibrium condition.

    y=c(y-t(y))+I(r )+g

    and the LM curve represents the money market equilibrium condition

    M/P0=l(r) +k(y)

    Current level of consumer confidence & firms confidence have a great impact on the IS curve that is in the product market equilibrium. If there is a fall in the level of ...

    Solution Summary

    This job highlights government spending.

    $2.19

    ADVERTISEMENT