IS curve
E746876
The IS curve is a macroeconomic tool that represents combinations of interest rates and output where the goods market is in equilibrium, forming one half of the traditional IS-LM model.
Statements (48)
| Predicate | Object |
|---|---|
| instanceOf |
economic model component
ⓘ
macroeconomic concept ⓘ |
| associatedWith |
Alvin Hansen
NERFINISHED
ⓘ
John Hicks NERFINISHED ⓘ |
| assumes | sticky prices in the short run in standard usage ⓘ |
| assumesGiven | expectations in the basic static model ⓘ |
| canBeEstimatedUsing | macroeconomic time series data ⓘ |
| canBeWrittenAs | Y = α(A − βi) in simple linear form ⓘ |
| capturesRelationshipBetween | real interest rate and aggregate demand ⓘ |
| contrastedWith | LM curve representing money market equilibrium ⓘ |
| definedInTermsOf |
equality of investment and saving
ⓘ
equality of planned spending and actual output ⓘ |
| dependsOn |
autonomous spending
ⓘ
interest sensitivity of investment ⓘ marginal propensity to consume ⓘ |
| derivedFrom |
consumption function depending positively on income
ⓘ
goods market equilibrium condition Y = C + I + G + NX ⓘ investment function depending negatively on interest rate ⓘ |
| describesEquilibriumIn | goods market ⓘ |
| hasAxes |
interest rate on the vertical axis
ⓘ
real output or income on the horizontal axis ⓘ |
| hasDynamicVersion | intertemporal IS curve in modern macroeconomics ⓘ |
| hasVariant | open-economy IS curve ⓘ |
| inOpenEconomyDependsOn |
exchange rate
ⓘ
foreign income ⓘ |
| interactsWith | LM curve ⓘ |
| intersectionWith | LM curve determines joint equilibrium interest rate and output ⓘ |
| isDownwardSlopingIn | interest rate–output space ⓘ |
| isHeldConstant |
money supply in the IS relation
ⓘ
price level in the basic IS–LM model ⓘ |
| isRelatedTo | aggregate demand curve through changes in price level and LM position ⓘ |
| isTaughtIn | intermediate macroeconomics courses ⓘ |
| isUsedIn | New Keynesian models as part of aggregate demand block ⓘ |
| originatedFrom | Keynesian cross model NERFINISHED ⓘ |
| partOf | IS–LM model NERFINISHED ⓘ |
| policyShiftExample |
contractionary fiscal policy shifts the IS curve to the left
ⓘ
expansionary fiscal policy shifts the IS curve to the right ⓘ |
| represents | combinations of interest rates and output where the goods market is in equilibrium ⓘ |
| shiftsLeftWhen |
autonomous spending decreases
ⓘ
taxes increase (other things equal) ⓘ |
| shiftsRightWhen |
autonomous consumption increases
ⓘ
autonomous investment increases ⓘ government spending increases ⓘ net exports increase ⓘ |
| slopeReason | higher interest rates reduce investment and thus equilibrium output ⓘ |
| usedFor |
analyzing fiscal policy effects on output and interest rates
ⓘ
short-run macroeconomic analysis ⓘ |
| usedIn | Keynesian macroeconomics ⓘ |
Referenced by (2)
Full triples — surface form annotated when it differs from this entity's canonical label.