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Discuss The Predictions For IS-LM Model For Australian Economy


Mainly due to uncertainty with the global economy and domestic macroeconomic policies, the Australian economy has recently registered decreases in consumer and business confidence. What are the IS-LM model predictions on the interest rate and output of this falling level of consumer and business confidence on the Australian economy:

(a) if the central bank allows the interest rate to change.

(b) if the central bank sees no reason to change the interest rate.

(c) if the central bank aims to keep output unchanged. What policy mix is required to achieve this macroeconomic goal.



The question belongs to Economics and it discusses about IS-LM model predictions on rates of interest and output in Australian economy.

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