Chapter-7-DD-7 (Page: 182) a. The LM has a flat segment at i=0 and then slopes up.
{"Image DocumentName": "Chapter-7-DD-7 (Page: 182)a. The LM has a flat segment at i=0 and then slopes up.", "Image ImageDescription": "b. The IS slopes down as before. There is no flat segment at i=0. Arguably, the IS curve is undefined for nominal interest rates below zero. c. As P falls, M/P rises, and the nominal interest rate falls. Eventually, when P falls far enough, the nominal interest reaches zero. The AD curve slopes down until P reaches the level consistent with i=0. For levels of P below this threshold, the AD curve is vertical. d. There is no effect on output in the short run or the medium run. Since the money stock does not affect the interest rate, it does not affect output.", "Image XResolution": "37", "Image YResolution": "37", "Image ResolutionUnit": "Pixels/Centimeter", "Image Software": "SlidePlayer", "Image YCbCrPositioning": "Centered"}