Macroeconomics essay example

9 The IS-LM model—often depicted graphically and thought to encapsulate traditional Keynesian theory—describes the relationship between real output (GDP) and nominal interest rates. On a graph with real interest rates on the vertical axis and real GDP on the horizontal, IS-LM is seen as a downward-sloping IS curve (investment and savings, or the market for economic goods) and an upward-sloping LM curve (liquidity preference and money supply). The intersection of these curves indicates an economy’s equilibrium interest rate and GDP.

Macroeconomics essay example

macroeconomics essay example

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