Using the IS – LM framework, in which model would monetary policy be more effective (in terms of increasing the level of income)?

/in /by

Using the IS – LM framework, in which model would monetary policy be more

     effective (in terms of increasing the level of income)? THINK IT THROUGH

     A. I = f (i)             S = f (Y)         G = Go

     B. I = f (i)             S = f (Y)         G = Go – g (i)

Using the IS – LM framework, in which model would monetary policy produce larger

      income changes (per unit of monetary stimulus)? THINK IT THROUGH

  1. Tx = Txo
  2. Tx = To + tY               t > 0

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