Relations between the Money Market, Loanable Funds, and Aggregate Demand and Aggregate Supply.
To show that changes carry over you go from graph to graph showing its relations with one another. For example if there is an increase in demand in the money market there will also be an increase in demand on the Loanable Funds Graph. This then also carries over to the AD AS graph showing that the Demand also increase. You can draw a single dotted line passing through all three graphs to help you as it will basically look the same. Supply of Money will change the Price Level directly also known as the Fisher Effect. Which is used to explain that all the graphs tie to each other.
No comments:
Post a Comment