IS LM Model | IS-LM Numerical Example | Equation of IS curve | Part 2 | Ecoholics

IS-LM Model | IS-LM Numerical Problem | Macro Economics | Learn Economics on Ecoholics | Part 1
   • IS-LM Model | IS-LM Numerical Problem...  

The IS and the LM curves relate the two variables: (a) income and (b) the rate of interest. Income and the rate of interest are therefore determined together at the point of intersection of these two curves where- (1) the goods market is in equilibrium, that is, the aggregate demand equals the level of aggregate output, and (2) the demand for money is in equilibrium with the supply of money (i.e., the desired amount of money is equal to the actual supply of money)

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