The IS-LM model is typically represented graphically with two intersecting curves: the IS curve and the LM curve. The IS curve represents equilibrium in the goods market, showing the combinations of interest rates and output levels where total spending equals total output. The LM curve represents equilibrium in the money market, showing the combinations of interest rates and output levels where the demand for money equals the supply of money.
These curves are typically shown on a graph with the interest rate on the vertical axis and output on the horizontal axis. The point where the IS and LM curves intersect represents the equilibrium point in the economy, where both the goods market and money market are in equilibrium.
So, yes, the IS-LM model is typically represented graphically with IS and LM curves.
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Google Gemini AI
May 15
Yes, the LM curve is typically represented graphically.