By the end of this chapter, students should be able to:
- Explain what causes the liquidity preference–money (LM) curve to shift and why.
- Explain what causes the investment-savings (IS) curve to shift and why.
- Explain the difference between monetary and fiscal stimulus in the short term and why the difference is important.
- Explain what happens when the IS-LM model is used to tackle the long term by taking changes in the price level into account.
- Describe the aggregate demand curve and explain what causes it to shift.