What is the relationship between the IS curve and the LM curve

First, the market is different.

1. IS curve: the trajectory of all the combination points that meet the equilibrium of income and interest rate in the product market.

2. LM curve: the trajectory of all the points at which the level of income and interest rates are combined to satisfy the equilibrium in the money market.

Second, the slope and the influencing factors of the slope are different.

1. LM curve.

1) The slope is: dr dy = k 1;

2) The slope of the LM curve depends on the marginal propensity to hold money (K) and the elasticity coefficient of speculative demand for money to changes in interest rates (L).

2. IS curve.

1) Slope: dr dy=-(1-b+bt) h=-[1-(1-t)b] h<0

2) Factors influencing the slope of the IS curve: b and h.

The IS curve is a curve that describes the relationship between interest rates and national income in the case of product market equilibrium, and is called the IS curve because i = s when the product market is in equilibrium in the two-sector economy.

The trajectory of the point at which the product market reaches equilibrium, various combinations of income and interest rates. In a two-sector economy, the mathematical expression of the IS curve is i(r)=s(y) and its slope is negative, indicating that the IS curve is generally a curve that slopes to the lower right. Generally speaking, in the product market, the combination of income and interest rates on the right side of the IS curve is an unbalanced mix of investments that are less than savings; The combination of income and interest rate on the left side of the IS curve is a non-equilibrium portfolio in which investment is greater than savings, and only the combination of income and interest rate on the IS curve is an equilibrium portfolio in which investment equals savings.

The LM curve represents the trajectory of the point at which the money supply equals the various combinations of income and interest rates when the money supply is equal to the demand for money. The mathematical expression of the LM curve is M p=ky-hr and its slope is positive, which indicates that the LM curve is generally a curve that slopes to the upper right. Generally speaking, in the money market, the combination of income and interest rate on the right side of the LM curve is an unbalanced combination in which the demand for money is greater than the money supply; The combination of income and interest rate on the left side of the LM curve is an unbalanced combination in which the demand for money is less than the money supply. Only the combination of income and interest rates located on the LM curve is an equilibrium combination in which the demand for money equals the supply of money.

IS Curve: The meaning of IS curve is investment = savings.

s=y-c i.e. s=y-(100+

i=s i.e.

Get: r=250 6-1 30y

LM Curve: The meaning of LM curve is money demand = money supply.

l1=l2 i.e.

Get: r = when the commodity market and the currency market are in equilibrium at the same time.

250/6-1/30y=

Gets: y=950

r=10%<>

IS curve:

It is a curve that describes the relationship between interest rates and national income in product market equilibrium, and is called an is IS curve because i = s when the product market is in equilibrium in two sectors of the economy.

The LM curve represents the trajectory of the point at which the money supply equals the various combinations of income and interest rates when the money supply is equal to the demand for money.

IS Curve: The meaning of IS curve is investment = savings.

s=y-c i.e. s=y-(100+

i=s i.e.

Get: r=250 6-1 30y

LM Curve: The meaning of LM curve is money demand = money supply.

l1=l2 i.e.

Get: r = when the commodity market and the currency market are in equilibrium at the same time.

250/6-1/30y=

Gets: y=950

r=10%<>

The first is the formula for equilibrium income, which refers to the equilibrium income expression in the case of a two-part economy (i.e., business and household).

It can also be y=c+i. The second formula, Yu's, refers to the three-part economic situation (i.e., enterprise, family and **), as can be seen from the question, it is a three-sector economy, so the formula y=c+i+g is used (it is used more when doing the problem).

Solution: IS curve.

y=c+i+g=130+, y=4075-5000r

2) ** When purchase spending increases, the right shift of the IS curve leads to an increase in interest rate r, and the increase in the profit-loss ratio leads to more crowding out of private investment due to the increase in the interest rate sensitivity of investment after the change in the investment function, thus fiscal policy.

The effect is smaller, and the equilibrium income increases less than before the change.

3) lm curve when the supply ratio increases.

A shift to the right leads to a decrease in interest rates, and because the interest rate sensitivity of investment increases after the change in the investment function, a decrease in interest rates leads to a greater increase in private investment, which makes monetary policy more effective and the equilibrium income will increase more than before the change.

The i s curve is derived from the viewpoint that commodity market equilibrium requires that income equals planned expenditure, and is a curve that reflects the relationship between interest rates and income.

The LM curve is derived from the idea that the equilibrium requirement of the money market and the supply of money is equal to the demand for money, and it is a curve that reflects the correlation between interest rates and income.

The IS-LM model is at the heart of the essence of Keynes's theory.

The answer is as follows: 1) y=c+i+g+nx=300+

So the IS curve is: y=2000-5000r

So the LM curve is: y=1100+4000r

3) y=2000-5000r, y=1100+4000r to solve this equation, to get the income and interest rate at the same time r=, y=1500

FYI.

1. The flatter the LM curve, the more obvious the effect of fiscal policy, the income growth, and the small crowding out effect.

2. The flatter the IS curve, the less obvious the effect of fiscal policy, the greater the revenue growth and crowding out effect.

3. When the vertical IS curve intersects the horizontal LM curve (the Keynesian region of LM), fiscal policy is fully effective.

4. The sloping IS curve intersects with the horizontal LM curve (the Keynesian area of LM), and fiscal policy is still very effective. There is no crowding out effect.

5. When the horizontal IS curve intersects with the vertical LM curve (the classical region of LM), the fiscal policy is completely ineffective, and the monetary policy is completely effective.

The level of full employment of the economy is $70 billion, and at p = 2, the aggregate demand index is equal to the aggregate supply, the consumption function c = 30 + the investment function i = 150 6r, the tax t = 100, the expenditure g = 100, the nominal money supply ms = 200, the level p = 2, and the nominal back-chain money demand md = 4 r. Q:

1) List the IS curve equation and the lm curve equation.

2) ** How will the IS curve change if spending increases by $5 billion?

3) How does output change?

Solution: (1) According to the known conditions, obtain:

The IS curve equation is: Y = 1000 30R, and the LM curve equation is: Y = 1000 + 20R, 2) When ** expenditure increases by $5 billion, the new IS curve equation is:

y = 1250 20r, the IS curve moves up;

3) From the IS curve equation and the LM curve equation, we get:

y = 1100, which was previously increased by 100

I don't understand all the answers, can you help me solve them?