Answer to Question #214019 in Macroeconomics for Muhammad Muddsar

Question

What property is shared by all points along the LM schedule? Along the IS schedule? 

Answer 1

The IS curve slopes downhill and to the right at lower interest rates because investment is higher, which translates into more total output (GDP). The LM curve shows all income (GDP) and interest rates at which money supply matches money (liquidity) demand.Along the IS schedule, the LM schedule is a set of points that represents all of the potential combinations of interest rates and income levels that are consistent with money market equilibrium.