Macroeconomics: The IS-LM Model

A guide to understand and formulate economic policies

The course ‘Macroeconomics: The IS-LM Model’ will offer a detail outline of various components of an economy. It will also help understand the effects of various policy measures taken by governments and central banks on an economy.

The course is divided into four sections-

In section A, an overview of the economy with special reference to goods and asset markets will be presented to make the learners familiar with the components that constitute an economy. Different components of aggregate demand, determination of national income in the Keynesian framework, various motives for money demand, money supply and determination of interest rate in the money market will be discussed in detail.

Section B defines and derives both IS & LM curves and thereby introduces goods and money markets in technical way. It also explains the effects of possible changes in goods and money markets on IS and LM curve.

In section C, learners will be familiar with demand management policies and their effects on IS and LM curves.

And in the final section, that is, in section D, simultaneous equilibrium of an economy will be analysed along with the effects of fiscal and monetary policies that will equip the learners to evaluate the impacts of a particular policy measure on an economy and also make them able to formulate policy suggestions.