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Q. Show the investment function in the IS-LM model?
The investment function in the IS-LM model
Investment was an exogenous variable in cross model owing to the fact that interest rate was exogenous. Now that interest rate is endogenous, investment will be endogenous. As for classical model, investment relies negatively on the real interest rate but then since R = r in the IS-LM model, we can make investment a function of R: I = I(R).
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importance and limitation of principle of acceleration
Q. What is Demand for money? Demand for money The demand for money depends negatively on R and positively on the Yin the IS-LM model As fo
Given the above trade between the two countries, explain the trade effects on product prices, and factor incomes. Why do these effects occur?
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