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For all of the questions below consider a closed economy. Make sure to include an explanation...

For all of the questions below consider a closed economy. Make sure to include an explanation for each question.

4) Using an IS-LM-FE framework analyze the consequences of the following event according to a Keynesian economist. The consumer confidence drops, which leads people to form more pessimistic expectations about future incomes.

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4)If consumers feel less confident about the future, they will invest less without paying heed to the interest rate.. This will lead to decrease in investment and IS curve will shift to the left. The consumers consume less and save more and IS shifts to the left.The economy moves down along the LM curve.Interest rate and output fall..

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