IS-LM model

E58352

The IS-LM model is a macroeconomic framework that depicts the interaction between the goods market and the money market to determine equilibrium output and interest rates.

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All labels observed (7)

Statements (51)

Predicate Object
instanceOf Keynesian macroeconomic model
general equilibrium framework
macroeconomic model
abbreviation IS-LM model self-linksurface differs
surface form: IS-LM
assumes closed economy
fixed price level
given money supply
interest-sensitive investment
liquidity preference for money
sticky prices in the short run
basedOn Keynesian economics
The General Theory of Employment, Interest and Money
captures crowding out effect of fiscal policy
liquidity trap possibility
transmission mechanism of monetary policy
criticizedBy New Classical macroeconomics
surface form: New Classical economists

real business cycle theory
surface form: Real Business Cycle theorists
criticizedFor assuming fixed price level
neglecting expectations
static nature
describes interaction between goods market and money market
determines equilibrium interest rate
equilibrium output
developedBy Alvin Hansen
John R. Hicks
surface form: John Hicks
domain macroeconomics
equilibriumCondition intersection of IS and LM curves
extendedBy IS-LM model self-linksurface differs
surface form: IS-LM-BP model

Mundell-Fleming model
fullName IS-LM model self-linksurface differs
surface form: Investment-Saving Liquidity Preference-Money Supply model
graphicalRepresentation two-dimensional diagram with interest rate and output
hasComponent IS-LM model self-linksurface differs
surface form: IS curve

LM curve
horizontalAxis real output
introducedBy John R. Hicks
surface form: John Hicks
introducedIn 1937
ISCurveRepresents combinations of interest rate and output where goods market is in equilibrium
LMCurveRepresents combinations of interest rate and output where money market is in equilibrium
mathematicalFormulation system of simultaneous equations for goods and money markets
relatedConcept Keynesian economics
surface form: Keynesian cross

aggregate demand curve
liquidity preference theory of interest
represents equilibrium in goods market
equilibrium in money market
taughtIn graduate macroeconomics courses
undergraduate macroeconomics courses
usedFor analysis of aggregate demand
analysis of fiscal policy
analysis of monetary policy
short-run macroeconomic analysis
verticalAxis interest rate

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Input
Subject: IS-LM model
Description of subject: The IS-LM model is a macroeconomic framework that depicts the interaction between the goods market and the money market to determine equilibrium output and interest rates.

Referenced by (10)

Full triples — surface form annotated when it differs from this entity's canonical label.

Keynesian economics usesConcept IS-LM model
John R. Hicks knownFor IS-LM model
this entity surface form: IS–LM model
IS-LM model fullName IS-LM model self-linksurface differs
this entity surface form: Investment-Saving Liquidity Preference-Money Supply model
IS-LM model abbreviation IS-LM model self-linksurface differs
this entity surface form: IS-LM
IS-LM model hasComponent IS-LM model self-linksurface differs
this entity surface form: IS curve
IS-LM model extendedBy IS-LM model self-linksurface differs
this entity surface form: IS-LM-BP model
neoclassical synthesis usesModel IS-LM model
this entity surface form: IS–LM model
Mr. Keynes and the Classics introducesConcept IS-LM model
this entity surface form: IS-LM framework
LM curve isPartOf IS-LM model
this entity surface form: IS–LM model
Mundell-Fleming model extends IS-LM model