ISLM
Inflation goes up 5%, how does this affect interest rates and output?
Lm curve moves up: increase interest rates and decreases output
San Francisco gets nuked, how would this affect interest rates and output?
(is shifts left) -> output decreases and interest rates lower
Everyone gets neuralink installed and is exposed to inescapable constant advertising, how does this effect interest rates and output?
Shifts the IS curve to the right, that increases interest rates and output
Climate change approaches a critical tipping point that would lead to deadly outcomes in a few decades from now, but the government successfully prevents it with a green energy transition. How does that affect interest rates and output?
IS curve shifts to the right - Output and interest rates both increase
All the money in the world freezes in people’s hands unless spent in 24 hours, how does this affect interest rates and output?
Interest rates decrease in order to incentivize people to hold onto their cash, and thus the LM curve shifts down and output increases.