Draw a fully labeled figure of the FE line, the LM curve and the IS curve. Label the point where all three curves intersect E. Show in the figure how the curves move in response to a positive supply shock (i.e. an increase in A). Then answer how each of the following macroeconomic variables is affected.
Employment {INCREASES, DECREASES, DOES NOT CHANGE}
Unemployment {INCREASES, DECREASES, DOES NOT CHANGE}
Real wage {INCREASES, DECREASES, DOES NOT CHANGE}
Output {INCREASES, DECREASES, DOES NOT CHANGE}
Price level {INCREASES, DECREASES, DOES NOT CHANGE}
Real money supply {INCREASES, DECREASES, DOES NOT CHANGE}
Real money demand {INCREASES, DECREASES, DOES NOT CHANGE}
Real interest rate {INCREASES, DECREASES, DOES NOT CHANGE}