Download Figure I-1. The IS Curve Output Interest Rate IS

Interest
Rate
IS
Output
Figure I-1. The IS Curve
Interest
Rate
MP
Output
Figure I-2. The MP Curve
Interest
Rate
MP
IS
Output
Figure I-3. The IS-MP Diagram
Planned
Expenditure
E=Y
E = C(Y-T) + I(r) + G1
E = C(Y-T) + I(r) + G0
45°
Output
Figure I-4. The Effect of an Increase in Government Purchases
on Output at a Given Interest Rate
Interest
Rate
MP
IS1
IS0
Output
Figure I-5. The Effects of an Increase in Government Purchases
on Output and the Interest Rate
Interest
Rate
MP1
MP0
IS
Output
Figure I-6. The Effects of a Shift to Tighter Monetary Policy
Interest
Rate
MP0
MP1
IS0
IS1
Output
Figure I-7. The Effects of Simultaneous Changes in Fiscal and Monetary
Policy that Leave Output Unchanged
Interest
Rate
MP
IS0
IS1
Output
Figure I-8. The Effects of a Fall in Consumer Confidence
Interest
Rate
E0
•B
•
• E1
•A
IS
Output
Figure I-9. The Effects of an Increase in the Money Supply
Planned
Expenditure
E=Y
C(Y-T) + I(r0) + G + CF(r0)
C(Y-T) + I(r1) + G + CF(r1)
45°
Output
Figure II-1. The Effects of a Rise in the Interest Rate on Equilibrium Output
in the Goods Market with Floating Exchange Rates
Interest
Rate
MP
IS
Output
Figure II-2. The IS-MP Diagram for an Open Economy with
Floating Exchange Rates
r
MP
r
IS
CF(r)
Y
CF
ε
NX(ε)
NX
Figure II-3. The Determination of Net Exports and the Exchange Rate
Under Floating Exchange Rates
r
MP
IS0
r
IS1
CF(r)
Y
CF
ε
NX(ε)
NX
Figure II-4. The Effects of an Increase in Government Purchases
with Floating Exchange Rates
r
MP1
r
MP0
IS
CF(r)
Y
CF
ε
NX(ε)
NX
Figure II-5. The Effects of a Shift to Tighter Monetary Policy with
Floating Exchange Rates
r
MP
r
IS
CF(r)
Y
CF
ε
NX1(ε)
NX0(ε)
NX
Figure II-6. The Effects of Protectionist Policies with Floating Exchange Rates
r
-
RG(r) = NX(ε)-PCF(r)
r
~
MP
r
0
RG
Figure II-7. Monetary Policy with Fixed Exchange Rates
Y
r
-
RG(r) = NX(ε)-PCF(r)
r
~
MP
r
IS
0
RG
Figure II-8. The Determination of Output and the Interest Rate in an
Open Economy with Fixed Exchange Rates
Y
r
-
RG(r)=NX(ε)-PCF(r)
r
~
MP
r
IS0
0
RG
Figure II-9. The Effects of an Increase in Government Purchases
with Fixed Exchange Rates
Y
IS1
r
RG(r)=NX(ε)-PCF(r)
~
r
~
MP0
MP1
E0
● E1
●
r
IS
0
RG
Figure II-10. The Effects of Expansionary Monetary Policy with
Fixed Exchange Rates
Y
r
RG0(r)
RG1(r) r
~
MP0
r0
~
MP1
r1
IS0
0
RG
IS1
Y
Figure II-11. The Effects of Protectionist Policies with Fixed Exchange Rates
Note: RG0(r) = NX0( ε )-PCF(r); RG1(r) = NX1( ε )-PCF(r)
r
RG1(r)
RG0(r)
r
~
r1
●
E1
MP1
● E0
~
MP0
r0
IS1
0
RG
IS0
Y
Figure II-12. The Effects of a Fall in Export Demand with Fixed Exchange Rates
Note: RG0(r) = NX0( ε )-PCF(r); RG1(r) = NX1( ε )-PCF(r)
r
RG0(r) RG1(r)
r
~
MP0
r0
~
MP1
r1
IS0
0
RG
Figure II-13. The Effects of a Devaluation
Note: RG0(r) = NX( ε 0)-PCF(r); RG1(r) = NX( ε 1)-PCF(r)
IS1
Y
Inflation
IA
Output
Figure III-1. The Inflation Adjustment Line
r
MP1
MP0
IS
Y
π
π1
π0
AD
Y
Figure III-2. The Aggregate Demand Curve
Inflation
IA
AD
Output
Figure III-3. The AD-IA Diagram
Inflation
• ELR
A
•
IA
AD
Y
Figure III-4. Adjusting to Long-Run Equilibrium
Output
Inflation
•
ELR
IA
AD
Y
Figure III-5. Long-Run Equilibrium
Output
Interest
Rate
MP
rLR
IS
Y
Output
Figure III-6. The Real Interest Rate When the Economy Is in Long-Run Equilibrium
Interest
Rate
MP
IS1
IS0
Output
Figure III-7. The Immediate Effects of an Increase in Government Purchases
Inflation
•
E0
E1
•
IA
AD0
Y
AD1
Output
Figure III-8. The Immediate Effects of an Increase in Government Purchases
in Terms of the AD-IA Diagram
Inflation
•
•
E1LR
E 0LR
IA
AD0
Y
AD1
Output
Figure III-9. The Effects of an Increase in Government Purchases
Interest
Rate
MP1
MP0
1
rLR
0
rLR
IS1
IS0
Y
Output
Figure III-10. The Long-Run Effects of an Increase in Government Purchases
in Terms of the IS-MP Diagram
Interest
Rate
MP1
MP0
IS
Output
Figure III-11. The Immediate Effects of a Shift to Tighter Monetary Policy
Inflation
•
•
E 0LR
IA
E1LR
AD0
AD1
Y
Output
Figure III-12. The Effects of a Shift to Tighter Monetary Policy
Interest
Rate
MP1
MP0, MPLR
IS
Y
Output
Figure III-13. The Long-Run Effects of a Shift to Tighter Monetary Policy in
Terms of the IS-MP Diagram
Inflation
IA1
IA0
AD
Y
Output
Figure III-14. The Immediate Effects of an Unfavorable Inflation Shock
Inflation
IA1
•
ELR
IA0
AD
Y
Output
Figure III-15. The Effects of an Unfavorable Inflation Shock
Inflation
•
E 0LR
IA
•
E1LR
AD
Y0
Y1
Output
Figure III-16. The Effects of a Fall in the Natural Rate of Unemployment
Inflation
B
•
A
•
•
E 0LR
IA0
IA1
•
E1LR
AD0
AD1
Y
Output
Figure III-17. The Effects of a Credible Shift to Tighter Monetary Policy