Distinguish between the short run and the long run

Reference no: EM131131321

According to the Keynesian IS-LM model, what is the effect of each of the following on output, the real interest rate, employment, and the price level? Distinguish between the short run and the long run.

a. Financial deregulation allows banks to pay a higher interest rate on checking accounts.

b. The introduction of sophisticated credit cards greatly reduces the amount of money that people need for transactions.

c. A severe water shortage causes sharp declines in agricultural output and increases in food prices.

d. A temporary beneficial supply shock affects most of the economy, but no individual firm is affected sufficiently to change its prices in the short run.

Reference no: EM131131321

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