(Solved): Consider two models of liquidity preference in the IS-LM Framework. Model 1: Standard model of Chap ...

Consider two models of liquidity preference in the IS-LM Framework. Model 1: Standard model of Chapter 13-14. Money market equilibrium is given by Model 2: Demand for Money depends on disposable income so Assume that the government has reduced toxes \( \frac{M}{p}=L(r, Y \) by the government has reduced \( \operatorname{taxes}(T) \). As a result of the by much more under Model increase; 2: 1 than under Model increase; \( 1 ; 2 \) decrease; \( 2 ; 1 \) decrease; \( 1 ; 2 \)