Question

what is IS - LM Model

Answer 1

Answer:

The IS-LM model, which stands for "investment-savings" (IS) and "liquidity preference-money supply" (LM) is a Keynesian macroeconomic model that shows how the market for economic goods (IS) interacts with the loanable funds market (LM) or money market.

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Answer 2

Answer:

Explanation:

1) The IS-LM model describes how aggregate markets for real goods and financial markets interact to balance the rate of interest and total output in the macroeconomy.

2) IS-LM stands for "investment savings-liquidity preference-money supply."

3) The model was devised as a formal graphic representation of a principle of Keynesian economic theory.

4)On the IS-LM graph, "IS" represents one curve while "LM" represents another curve.

5)IS-LM can be used to describe how changes in market preferences alter the equilibrium levels of gross domestic product (GDP) and market interest rates.

6)The IS-LM model lacks the precision and realism to be a useful prescription tool for economic policy.