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Amit Sir
I read somewhere that when it's real interest rate/ output space, expected inflation shifts LM curve down to the right. And when it's nominal interest rate/output space, expected inflation shifts IS curve. The reason LM curve shifts down is given as because of expected inflation, real money demand goes down thus shifting LM curve. I don't get the link between expected inflation and Investment. in olivier Blanchard book, it's given that in short run, it doesn't matter whether interest rate is real or nominal. You get the same result. then why there is a difference when there is nominal or real interest rate. I tried hard but i don't want to construct wrong reasoning just to get to the answer.
Plz Help
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