Undergone significant economic slowdown

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Reference no: EM131378605

In the last 6 months the European Union has undergone a significant economic slowdown with corresponding declines in both output and income (assume the exchange rate remains constant). The European Union is a significant trading partner of the U.S. With that in mind (for parts a and c below you may use the IS-LM template if you desire): a. Draw a product/goods market graph for the U.S. to show how the decline in European Union income levels will impact U.S. economic growth. Be sure to label your graph including the old and new equilibrium points. Of C, I, G and NX which factor(s) will be affected and why? b. Provide a brief explanation as to how the U.S. economy goes from the old equilibrium in part a) to the new equilibrium. c. Draw a money market graph to show how your change in part a influences interest rates. No explanation necessary.

Reference no: EM131378605

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