Is lm model (1) analysis
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The document discusses the IS-LM model, a fundamental tool in understanding the economics of money, banking, and financial markets. It explores the determination of aggregate output and interest rates through the equilibrium of goods and money markets, highlighting key concepts such as the Keynesian cross, multiplier effect, and impacts of fiscal and monetary policies. Additionally, it addresses the factors causing shifts in both IS and LM curves, ultimately examining their implications for government policy and economic equilibrium.
Is lm model (1) analysis
- 1. IS-LM MODEL The Economics of Money, Banking, and Financial Markets7th Frederic S. Mishkin
- 2. J what is IS-LM Model? The Economics of Money, Banking, and Financial Markets7th • Economics Crystal ball. • Tool for deeper understanding Government policy & GDP movements. • John Hicks 1937.
- 3. The Economics of Money, Banking, and Financial Markets7th Determination of Aggregate Output. › Keynesian recognitions: › Y=Yad ƒ(C+I+G+NX). › Keynesian analysis simplification. - Fixed price level. - Planned investment (known value). - Gradually assessment addition.
- 4. The Economics of Money, Banking, and Financial Markets7th Determination of Aggregate Output. › Equilibrium and Keynesian cross diagram.
- 5. The Economics of Money, Banking, and Financial Markets7th Determination of Aggregate Output. ›Do not forget: - Up ward slopping (MPC). - Multiplier affect. - What if NX added (100$).
- 6. The Economics of Money, Banking, and Financial Markets7th Equilibrium in good market (driving IS curve). › interest rate & planned investment. - Fund deficit. - Fund surplus. › Interest rate & net export. › Interest rate & aggregate out-put.
- 7. The Economics of Money, Banking, and Financial Markets7th Equilibrium in good market (driving IS curve).
- 8. The Economics of Money, Banking, and Financial Markets7th Equilibrium in good market (driving IS curve).
- 9. The Economics of Money, Banking, and Financial Markets7th What is IS curve tell us? › Good market clearance. › Equilibrium level of out-put, given interest rate. - Good market excess supply. - Good market excess demand. › Note: no unique out-put level.
- 10. The Economics of Money, Banking, and Financial Markets7th Equilibrium in money market (driving LM curve). › Equilibrium condition: M.D = M.S › Main building blocks: - Liquidity preferences theory. Money demand determents: • Interest rate. • income.
- 11. The Economics of Money, Banking, and Financial Markets7th Equilibrium in money market (driving LM curve).
- 12. The Economics of Money, Banking, and Financial Markets7th What is LM curve tell us? › Money market clearance. › Equilibrium level of interest rate, given level of out- put. - Excess money supply. - Excess money demand. › Note: no unique interest rate.
- 13. The Economics of Money, Banking, and Financial Markets7th IS-LM determination aggregate out-put and interest rate. › Equilibrium in both markets(IS-LM curves intersection) › Market forces to ward General Equilibrium.
- 14. The Economics of Money, Banking, and Financial Markets7th Factors causes IS curve to shift. › Change in: - Autonomous consumer expenditure. - Investment spending (unrelated to interest rate). - Net export (unrelated to interest rate). - Government spending or taxes.
- 15. The Economics of Money, Banking, and Financial Markets7th Factors causes IS curve to shift.
- 16. The Economics of Money, Banking, and Financial Markets7th Factors causes IM curve to shift. › Change in Money supply.
- 17. The Economics of Money, Banking, and Financial Markets7th Factors causes IM curve to shift. › Change in Autonomous Money demand.
- 18. The Economics of Money, Banking, and Financial Markets7th Change in equilibrium level, interest rate and aggregate out-put. › Response to change in fiscal policy. › Response to change in monetary policy.
- 19. The Economics of Money, Banking, and Financial Markets7th Monetary policy VS Fiscal policy › Solving high unemployment: - Using fiscal policy. - Using monetary policy. › Conclusion.
- 20. The Economics of Money, Banking, and Financial Markets7th Monetary policy VS Fiscal policy › Stable IS curve. - Targeting interest rate. - Targeting money supply.
- 21. The Economics of Money, Banking, and Financial Markets7th Monetary policy VS Fiscal policy › Stable LM curve. - Interest rate targeting. - Money supply targeting.
- 22. The Economics of Money, Banking, and Financial Markets7th IS-LM model in long run. › Response to money supply. › Response to government spending.
- 23. The Economics of Money, Banking, and Financial Markets7th Driving aggregate demand curve.
- 24. The Economics of Money, Banking, and Financial Markets7th Factors shift Aggregate demand curve. › Shift in IS curve (is curve factors).
- 25. The Economics of Money, Banking, and Financial Markets7th Factors shift Aggregate demand curve. › Shifts in LM curve.
- 26. The Economics of Money, Banking, and Financial Markets7th Mathematics on board - Multiplayer affect. - Solving IS-LM equations.