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350 • Macroeconomicssource exhaustion (e.g., new technologies require less raw material andfossil energy), we would expect EC to shift to the right, while if resourceexhaustion outpaces technology (e.g., there is more slag per unit of usefulore or more environmental damage per barrel of oil extracted), we wouldexpect a shift to the left. (As you have no doubt realized by now, curveshifting is not an uncommon device in economic analysis.) However, interms of practical policy recommendations, perhaps the best approachwould be simply to impose the ecological constraint as a limit on throughput.For any given technology, a fixed limit on throughput will also limitY, but over time, new technologies and a different mix of goods and servicescan allow Y to increase without increasing throughput and threateningthe life-support functions of the ecosystem.BIG IDEAS to remember■■■■■■■Macroeconomic model vs.general equilibriumReal vs. monetary sectorsIS = LMMV = PQTransaction demand formoneyLiquidity preferenceRelation of bond prices tointerest rate■■■■■■■IS-LM analysis of monetaryand fiscal policyComparative staticsCrowding outInflation and disinflationUnemploymentMacro-allocationIS-LM adapted to showeconomic and biophysicalequilibriums