What determines what M =L(r+πe,Y) variable how determined (in the long run) M exogenous(the Fed) r adjusts to make s=T Y Y=F(K,L) P adjusts to make =(i,Y) CHAPTER 7 Money and Inflation slide 36CHAPTER 7 Money and Inflation slide 36 What determines what variable how determined (in the long run) M exogenous (the Fed) r adjusts to make S = I Y ( , ) M e L r Y P = + Y F K L = ( , ) P adjusts to make ( , ) M L i Y P =