1. Suppose the IS and LM curves show equilibria in the goods and money markets, respectively. Assume that these markets are clearly defined and separated. What effect on the curves and on overall equilibrium will the following events tend to have (will the curves shift right or left, will interest rates and income go up, down, or be uncertain?) (Some of the questions come with little hints in the text area at the bottom.) a) The Fed raises the discount rate.
IS Curve Will:	LM Curve Will:	Interest Rate Will:	Output Will:
??? Shift Right Shift Left Not Shift	??? Shift Right Shift Left Not Shift	??? Rise Fall Not Change	??? Rise Fall Not Change
Hint: ISLM analysis is most useful when only one curve moves.