Use the IS-LM model to predict the short-run effects of each of the following shocks on income, the real interest rate, consumption, and investment. In each case, explain what the Fed should do to keep income at its initial level. After the invention of a new high-speed computer chip, many firms decide to upgrade their computer systems a. A wave of credit card fraud increases the frequency with which people make transactions with cash. b. A best-seller titled "Retire Rich" convinces the public to increase the percentage of their income devoted to savings c. d. The appointment of a new Fed chairman increases expected inflation.
