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Chapter 12
Money, Interest and Income
Slide 1
Figure 12-1
In the short run, when the real money stock decreases, for instance, in
the early 1980s, the interest rate goes up and real output goes down.
Slide 2
Figure 12-2
The IS-LM model emphasizes the interaction between the goods and
assets markets. Spending, interest rates, and income are determined
jointly by equilibrium in the goods and assets markets.
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