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  1. LM curve represents the equilibrium in the money market. The Money Market is in Equilibrium when. Ms/P = Ld(Y, r + πe) Ms/P = Real Money Supply. L (Y , r + πe) = d. Real Money Demand. The money supply is decided by the Fed and does not change with interest rates. What shifts real money supply: M, P What shifts real money demand: Y, πe.

  2. Lecture Notes. Notes for lecture sessions 1–7 (PDF - 1.1MB) Financial Crisis and Our Models (PDF) Introduction and the IS-LM Model (PDF) Explaining C. Romer Numbers (PDF) Medium Run (PDF) U.S. Trade Balance and Current Account in 2009 (PDF) Fiscal Policy (PDF) Time Inconsistency and the Inflation Bias (PDF)

  3. Jun 10, 2024 · The basis of the IS-LM model is an analysis of the money market and an analysis of the goods market, which together determine the equilibrium levels of interest rates and output in the economy, given prices. The model finds combinations of interest rates and output (GDP) such that the money market is in equilibrium. This creates the LM curve.

  4. Dec 1, 2004 · Introduction: Se ven Decades of. the IS-LM Model. Michel De Vroe y and Kevin D. Hoo ver. For some twenty-five years after the end of W orld W ar II, the IS-LM. model dominated macroeconomics ...

  5. Macroeconomics: Intro and the IS-LM Model. 1These slides are NOT a substitute for chapters 2-5 of the book. They are meant to give you a more coincise and analytical presentation of the IS-LM model but many aspects of the model that are discussed in the book are not in these slides, and we shall assume you have read the book.

  6. Chapter 21The IS-LM modelAfter more basic re ections in the previous two chapters about short-run analysis, this chapter revisits what becam. known as the IS-LM model. This model is based on John R. Hicks summary of the analytical core of Keynes General Theory of Employment, Intere.

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  8. LM represents the price (in interest rate) that entrepreneurs are willing to pay in order to acquire capital to invest in a project. As the economy improves, there is more of a reason to engage in new entrepreneurial activities, so ceteris paribus they would be willing to pay more then. So a higher GDP drives up demand for investment capital on ...

    • 8 min
    • Sal Khan
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