Problem
On Friday, February 19, 2010, the Federal Reserve announced an increase in the discount rate. This announcement was widely interpreted (despite the Federal Reserve's efforts) as a signal that interest rates would increase in the future.
a) Comment on the effect of an increase in interest rates on the IS curve.
b) Show your answer graphically. Use the following information to answer Problems 8 and 9: In its February 18, 2010, edition, the Wall Street Journal stated, "The dollar strengthened [. . .] and stocks [. . .] followed suit. The Dow industrials rose 40.43 points, or 0.4%."
The response should include a reference list. Double-space, using Times New Roman 12 pnt font, one-inch margins, and APA style of writing and citations.