Macro 4
LM - IS model
LM - IS model
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Kartei Details
Karten | 11 |
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Sprache | English |
Kategorie | VWL |
Stufe | Universität |
Erstellt / Aktualisiert | 23.05.2013 / 30.05.2013 |
Lizenzierung | Kein Urheberrechtsschutz (CC0) |
Weblink |
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IS relation
Y must be equal to Z
production is equal to demand
IS curve
IS curve - ZZ relation
shift of ZZ curve ⇒ movement on IS-curve
movement on ZZ curve ⇒ shift of IS-curve
LM curve
- An increase in income leads, at a given interest rate, to an increase in the demand for money. Given the money supply, this increase in the demand for money leads to an increase in the equilibrium interest rate.
- Equilibrium in the financial markets implies that an increase in income leads to an increase in the interest rate. The LM curve is therefore upward sloping.
LM-relation
real money supply = real money demand (YL(i))
shifts in LM-curve
Increase in money supply ⇒ decrease i-rate ⇒ shift down
Decrease money supply ⇒ increase i-rate ⇒ shift up
(at a given Y (income) level)
effect of increase in taxes (fiscal policy)