Aggregate demand question help please!! Watch

snoopyx
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Consider an economy with an upward sloping (not vertical) short run AS curve,a vertical long run AS curve and a downward sloping AD curve. the economy is initially in long run equilibrium.
Time 0: before anything happens
TIme 1: the central bank reduces money supply by 5%
ignoring the AS curve, equilibrium is reached in the market for money and bonds (i adjusts) but output prices (P) remain constant
TIme 2: in response to the events in time 1, the economy moves along its short run AS i.e. the output market clears along with the market for money and bonds
Time 3: the short run AS curve shifts and a new long run equilibrium is reached where AD = AS at full employment output

1) between time 0 and time 1, i.e. at time 1,
does i (interest rate) go up/down, I (investment) go up/down and Yd (aggregate demad) go up/down

2) between time 1 and time 2
does i (interest rate) go up/down, I (investment) go up/down and M/P (liquidity) go up/down

3) between time 0 and time 2
does i (interest rate) go up/down, I (investment) go up/down and M/P (liquidity) go up/down

4) between time 2 and time 3
does i (interest rate) go up/down, I (investment) go up/down and M/P (liquidity) go up/down

many thanks!
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