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a) Briefly, explain what the IS curve and the LM curve represent. b) Explain the reason...

a) Briefly, explain what the IS curve and the LM curve represent.

b) Explain the reason that determines the slope of the IS curve and the factors that would make the IS curve steeper.

c) Explain the reason that would determine the slope of the LM curve and outline what would shift the curve to the right.

d) Use an IS-LM diagram to illustrate and explain why the interest rate is likely to decline during an economic contraction that is caused by negative business confidence.

e) How would a reduction in inflation impact on real money balances and the LM curve?

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