Title Details: | |
Income and Interest Rate: IS-LM model |
|
Authors: |
Kyrikos, Dimitrios |
Reviewer: |
Vlassis, Minas |
Subject: | LAW AND SOCIAL SCIENCES > ECONOMIC SCIENCES > MACROECONOMICS AND MONETARY ECONOMICS LAW AND SOCIAL SCIENCES > ECONOMIC SCIENCES > MACROECONOMICS AND MONETARY ECONOMICS > GENERAL AGGREGATIVE MODELS LAW AND SOCIAL SCIENCES > ECONOMIC SCIENCES > MACROECONOMICS AND MONETARY ECONOMICS > MACROECONOMICS: CONSUMPTION, SAVING, PRODUCTION, EMPLOYMENT, AND INVESTMENT LAW AND SOCIAL SCIENCES > ECONOMIC SCIENCES > MACROECONOMICS AND MONETARY ECONOMICS > PRICES, BUSINESS FLUCTUATIONS, AND CYCLES LAW AND SOCIAL SCIENCES > ECONOMIC SCIENCES > MACROECONOMICS AND MONETARY ECONOMICS > MONEY AND INTEREST RATES LAW AND SOCIAL SCIENCES > ECONOMIC SCIENCES > MACROECONOMICS AND MONETARY ECONOMICS > MONETARY POLICY, CENTRAL BANKING, AND THE SUPPLY OF MONEY AND CREDIT LAW AND SOCIAL SCIENCES > ECONOMIC SCIENCES > MACROECONOMICS AND MONETARY ECONOMICS > MACROECONOMIC POLICY, MACROECONOMIC ASPECTS OF PUBLIC FINANCE, AND GENERAL OUTLOOK LAW AND SOCIAL SCIENCES > ECONOMIC SCIENCES > INTERNATIONAL ECONOMICS > MACROECONOMIC ASPECTS OF INTERNATIONAL TRADE AND FINANCE |
Description: | |
Abstract: |
Assuming a constant price level, the equilibrium conditions of the goods and money markets provide a system in the two main variables of the macroeconomic system, namely income and the interest rate. Thus, we show that the interaction of the two markets determine a unique combination of income and the interest rate which secures simultaneous equilibrium in both markets. In mathematical terms, the equilibrium condition in the goods market represents the IS function, whereas the money market equilibrium condition stands for the LM function. We provide a graphical exposition of the IS-LM model and analyze the equilibrium effects of fiscal and monetary policies. Also, we discuss the policy implications of the liquidity trap case, when the interest rate falls to its lower bound.
|
Linguistic Editors: |
Kalokyri, Anastasia |
Technical Editors: |
Karamolegkou, Maria |
Type: |
Chapter |
Creation Date: | 2015 |
Item Details: | |
License: |
http://creativecommons.org/licenses/by-nc-nd/3.0/gr |
Handle | http://hdl.handle.net/11419/1564 |
Bibliographic Reference: | Kyrikos, D. (2015). Income and Interest Rate: IS-LM model [Chapter]. In Kyrikos, D. 2015. Macroeconomic Analysis and Policy [Undergraduate textbook]. Kallipos, Open Academic Editions. https://hdl.handle.net/11419/1564 |
Language: |
Greek |
Is Part of: |
Macroeconomic Analysis and Policy |
Publication Origin: |
Kallipos, Open Academic Editions |