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BUS360: Macroeconomics B: Lecture 3

1

r

Y

O

IS

LM1

LM0

Y

Y

O

450

Y0

YF

Y0

YF

O

W/P

L

SL

DL

O

L

Y

LF

LF

L0

L0

EO

E1

(W/P)0

(W/P)1

(a)

(b)

(c)

(d)

Diagram 3.4

The general case with Keynesian Effect