Answer to Question #80516 in Macroeconomics for Gem

Question

Analysis the behaviour of the market for goods and money at the intersection of IS-LM function

Answer 1

The IS-LM model is a macroeconomic tool that shows the relationship between interest rates and the asset market. The intersection of the "investment saving" (IS) and "liquidity" curves (LM) models a "general equilibrium" when the supposed simultaneous equilibrium occurs both in the interest markets and in the asset markets.
That is, a short-term equilibrium between interest rates and output is shown.
The IS-LM schedule examines the relationship between actual output or GDP and nominal interest rates. The whole economy boils down to two markets, products and money, and their respective characteristics of supply and demand push the economy to the point of equilibrium.