Answer to Question #250956 in Macroeconomics for Elvi

Question

What is a IS model

Answer 1

IS-LM model( Investment-Savings and Liquidity Preference- Money Supply) is a Keynesian macroeconomic model that shows how the market for economic goods(IS) interacts with the loanable funds market(LM).

The model describes how the rate of interest and total output in the macroeconomy are balanced from the interaction between aggregate markets for real goods and financial markets.