English Wikipedia - The Free Encycl...
Download this dictionary
IS–LM model
The IS–LM model, or Hicks–Hansen model, is a macroeconomic tool that shows the relationship between interest rates and real output, in the goods and services market and the money market (also known as the assets market). The intersection of the "investmentsaving" (IS) and "liquidity preferencemoney supply" (LM) curves is the "general equilibrium" where there is simultaneous equilibrium in both markets. Two equivalent interpretations are possible: first, the IS–LM model explains changes in national income when the price level is fixed in the short-run; second, the IS–LM model shows why the aggregate demand curve shifts. Hence, this tool is sometimes used not only to analyse the fluctuations of the economy but also to find appropriate stabilisation policies.

See more at Wikipedia.org...


© This article uses material from Wikipedia® and is licensed under the GNU Free Documentation License and under the Creative Commons Attribution-ShareAlike License