Sketch a money market diagramof increase in income, Business Economics

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Sketch a money market diagramof increase in income

Drawing the money market equilibrium to show the effect of rise in income on the interest rate.

Assume that money market is initially in equilibrium i.e. M/P = L = kY + hi. Now assume government reduced taxes which rise equilibrium income (Y). Sketch a money market diagram to show the effect of increase in income on the interest rate.

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Business Economics: Sketch a money market diagramof increase in income

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Business Economics: Sketch a money market diagramof increase in income

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