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21: IS-LM

Last updated

Jan 30, 2023
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- 20.4: Suggested Reading
- 21.1: Aggregate Output and Keynesian Cross Diagrams

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Chapter Objectives

By the end of this chapter, students should be able to:

Explain this equation: Y = Y_ad = C + I + G + NX.
Provide the equation for C and explain its importance.
Describe the Keynesian cross diagram and explain its use.
Describe the investment-savings (IS) curve and its characteristics.
Describe the liquidity preference–money (LM) curve and its characteristics.
Explain why equilibrium is achieved in the markets for goods and money.
Explain the IS-LM model’s biggest drawback.

Thumbnail: Image by krzysztof-m from Pixabay

Chapter Objectives

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