In this chapter you will learn the Is curve, and its relation to the Keynesian Cross the Loanable Funds model the LM curve, and its relation to the Theory of Liquidity Preference how the IS-LM model determines income and the interest rate in the short run when P is fixed
Context Chapter 9 introduced the model of aggregate demand and supply. Chapter 10 developed the IS-LM model, the basis of the aggregate demand curve. In Chapter 11, we will use the IS-LM model to see how policies and shocks affect income and the interest rate in the short run when prices are fixed