Re: DSE 2009 Paper Discussion

Posted by ViV on Jun 15, 2014; 11:19am
URL: http://discussion-forum.276.s1.nabble.com/DSE-2009-Paper-Discussion-tp7590860p7592798.html

I guess you are talking about Q33.
Here we are in (Y,e) space.
differentiate LM equation with respect to P. you will get dy/dp<0. In figure take IS-LM in (Y,e) space.
Now, Exogenous increase in P shifts the LM curve leftward becasue(dy/dp<0). so new equilibrium will be at lower y and higher e.