what shifts each curve

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Last updated 3:38 PM on 4/9/26
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13 Terms

1
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general rule for if it moves IS curve

if it changes demand at every interest rate then IS curve shifts.

2
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what causes movement along IS curve

changes in interest rate

3
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what happens to IS curve as a increases

IS curve shifts right. this is because people want to consume more when they have more

4
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what happens to IS curve as expected Y increases

IS curve shifts right

5
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what happens to IS curve as expected inflation increases

IS shifts right. this is because real interest rate (r) is lower so borrowing becomes cheaper in real terms. more people borrow so C+I increases shifting IS curve right.

6
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what happens to IS curve as K increases

normally IS curve shifts right because firms have more ability to invest, however a higher capital stock reduces need for investment so it depends

7
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what happens to IS curve as i increases

IS curve does not shift. simply movement along the curve

8
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what happens to LM curve when M increases

LM shifts down because since M/P increases, i must fall looking at equation

9
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what happens to LM curve when P increases

LM shifts up because since M/P decreases, i must increase looking at equation

10
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general rule for what shifts LM curve

only things that change money market equilibrium at every level of income will shift LM curve

11
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what will happen to LM with a change in income/output Y

movement along the LM curve

12
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what will affect the Phillips curve

things that affect inflation directly independent of ou9tput, for example cost push shocks, change in inflation expectations

13
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what causes shifts along the phillips curve

change in output gap