Reduction in the interest sensitivity of investment

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Reference no: EM131000973

Use the equation for the IS curve to discuss what happens to the IS curve in response to the following shocks. in each case provide a real world example of what might cause the shock.

a) Increase in autonomous consumption (IE C_o increases)

b) A reduction in the interest sensitivity of investment (IE A_1 decreases)

c) An increase in the marginal rate of taxation (IE T increases)

Reference no: EM131000973

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