Use the IS-LM model to determine the effects of each of the following on the gen

Question

Use the IS-LM model to determine the effects of each of the following on the general equilibrium values of the real wage, employment, output, real interest rate, consumption, investment, and price level. A reduction in the effective tax rate on capital increases desired investment The expected rate of inflation rises. An influx of working-age immigrants increases labor supply (ignore any other possible effects of increased population). Increased usage of automatic teller machines reduces the demand for money.

Explanation / Answer

In economics, inflation is a rise in the general level of prices of goods and services in an economy over a period of time.[1] When the general price level rises, each unit of currency buys fewer goods and services. Consequently, inflation also reflects an erosion in the purchasing power of money

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