Answer to Question #89812 in Macroeconomics for Jordan

Question

How to solve the following question using IS-MP model, Philip's Curve and Net Cash Outflow Graph?
The Fed has been raising interest rates. What is going to happen if it gets to a point that the economy may not be ready to accept the increases in interest rates? Use IS-MP model and Philip's curve. Make interpretations about its impact on export, import, consumption, investment, government purchase, output gap, unemployment and inflation.

Answer 1

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