ISLM Flashcards
The ISLM is a model of _________
expenditure
IS curve is derived from the _______ market
goods/ product
IS curve has a _______ relationship between Real GDP and Real IR
negative (downward sloping)
LM curve is derived from the _______ market
money
LM cure has a ________ relationship between Real GDP and Real IR
Positive (upward sloping)
Shifters in IS
C+I+G+(X-M)
Shifters in LM
Money supply
Price level
speculative demand for money
How would “Money supply” shift the LM
increase in MS= shift rightward
Decrease in MS= shift left
How would “price level” shift the LM
PL Rises= shifts left (inflation)
PL decreases= shifts right (deflation)
How would “speculative demand for money” shift the LM
SDM Rises= shift left
SDM decreases= shift right
Investment are influenced by IR (inverse relationship)
IR rise = Investments ________
IR decrease= Investments _______
decrease
increase
savings is affected by GDP (positive relationship)
High GDP= save ____
Low GDP= Save ____
more
less
