In this article we will discuss about the shifts of IS & LM curves, explained with the help of suitable diagrams. Also learn about the cause and effect of such shifts. Any fiscal policy change (a change in government expenditure or taxes) will shift the IS curve. Similarly, any monetary policy change will shift the LM curve. Shifts of the [...]
In this article we will discuss about the derivation and properties of IS and LM curve, explained with the help of suitable diagrams. The goods market equilibrium schedule is the IS curve (schedule). It shows combination of interest rates and levels of output such that planned (desired) spending (expenditure) equals income. The goods-market equilibrium schedule is a simple extension of [...]
In this article we will discuss about the method of derivation of the IS and LM curves, explained with the help of suitable diagrams. (a) Derivation of the IS curve: The IS curve is frequently derived graphically with a four-part diagram as shown in Fig. 13. Employing simple linear functions, part (a) of Fig. 13 is a plot of the [...]