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The effects of a consumer euphoria in the IS-MP model, Set the stage by drawing the diagrans corresponding to an inital equilbodum where there are times AD) and the Fed sets the real interest rate equal to the MPK. Labef the initial equlibrium as point A in the diagram. 5 uppose that the sapere are no AD shocks ingmut relative to the previous year, increasing the wealth of American consumers. Suppose that, at a result the economy expeniences a postive shock to Cencies by 10 percene Will be higher than at point A because of the increase in aC. B) wil be higher than at point A because of the increase in aC": be higher than at point A because of the increase in aC." point B wil be loser than at point A because of the chaspe in oC. "The effects of a consumer euphoria in the IS-MP model. Set the stage by drawing the diagram corresponding to an initial equilibrium where there are no AD shocks (normal-times AD) and the Fed sets the real interest rate equal to the MPK. Label the initial equilibrium as point A in the diagram. Suppose that the S\&PS00 increases by 10 percent relative to the previous year, increasing the wealth of American consumers. Suppose that, as a result, the economy experiences a positive shock to Consumption (i.e. aC increases). Assuming the Fed keeps interest rates unchanged, compare the initial and final equilibrium points (A and B) and pick which of the following statements is correct:" "At point B, the sum of investment and consumption will be the same as at point A because the increase in one will be offset by the reduction in the other." "At point B,investmentwillbethesameasatpointAbecausetherealinterestratehasnotchangedandtheintercept term ""al"" has not changed either. However, Consumption at point B will be higher than at point A because of the increase in aC." "At point B, investment will be lower than at point A because the real interest rate has increased but the intercept term " "al"" has not changed either. However, Consumption at point B will be higher than at point A because of the increase in aC." "At point B, investment will be higher than at point A because the real interest rate has increased but the intercept term "al"' has not changed either. However, Consumption at point B will be higher than at point A because of the increase in aC." "At point B, investment will be higher than at point A because the real interest rate has fallen but the intercept term ""al"u has not changed either. However, Consumption at point B will be higher than at point A because of the increase in aC." "At point B, investment will be the same as at point A because the real interest rate has not changed and the intercept term ""al"" has not changed either. However, Consumption at point B will be lower than at point A because of the change in aC." The effects of a consumer euphoria in the IS-MP model, Set the stage by drawing the diagrans corresponding to an inital equilbodum where there are times AD) and the Fed sets the real interest rate equal to the MPK. Labef the initial equlibrium as point A in the diagram. 5 uppose that the sapere are no AD shocks ingmut relative to the previous year, increasing the wealth of American consumers. Suppose that, at a result the economy expeniences a postive shock to Cencies by 10 percene Will be higher than at point A because of the increase in aC. B) wil be higher than at point A because of the increase in aC": be higher than at point A because of the increase in aC." point B wil be loser than at point A because of the chaspe in oC. "The effects of a consumer euphoria in the IS-MP model. Set the stage by drawing the diagram corresponding to an initial equilibrium where there are no AD shocks (normal-times AD) and the Fed sets the real interest rate equal to the MPK. Label the initial equilibrium as point A in the diagram. Suppose that the S\&PS00 increases by 10 percent relative to the previous year, increasing the wealth of American consumers. Suppose that, as a result, the economy experiences a positive shock to Consumption (i.e. aC increases). Assuming the Fed keeps interest rates unchanged, compare the initial and final equilibrium points (A and B) and pick which of the following statements is correct:" "At point B, the sum of investment and consumption will be the same as at point A because the increase in one will be offset by the reduction in the other." "At point B,investmentwillbethesameasatpointAbecausetherealinterestratehasnotchangedandtheintercept term ""al"" has not changed either. However, Consumption at point B will be higher than at point A because of the increase in aC." "At point B, investment will be lower than at point A because the real interest rate has increased but the intercept term " "al"" has not changed either. However, Consumption at point B will be higher than at point A because of the increase in aC." "At point B, investment will be higher than at point A because the real interest rate has increased but the intercept term "al"' has not changed either. However, Consumption at point B will be higher than at point A because of the increase in aC." "At point B, investment will be higher than at point A because the real interest rate has fallen but the intercept term ""al"u has not changed either. However, Consumption at point B will be higher than at point A because of the increase in aC." "At point B, investment will be the same as at point A because the real interest rate has not changed and the intercept term ""al"" has not changed either. However, Consumption at point B will be lower than at point A because of the change in aC

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