The IS-LM Model - Lecture#14 The IS-LM Model Econ 1110 Spring 2008 Professor Ted Temzelides Lecture#14 1 The IS-LM Model FE Line Equilibrium in labor

The IS-LM Model - Lecture#14 The IS-LM Model Econ 1110...

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Econ 1110, Spring 2008, Professor Te 1 Lecture #14 The IS - LM Model
Econ 1110, Spring 2008, Professor Te 2 The IS - LM Model FE Line Equilibrium in labor market IS Curve Equilibrium in goods market LM Curve Equilibrium in asset markets
Econ 1110, Spring 2008, Professor Te 3 FE Line: Equilibrium in the Labor Market Y Y AF K N = = ( , ) Output, Y Real Interest Rate, r Y FE Line A increases Capital stock increases Population increases
Econ 1110, Spring 2008, Professor Te 4 Labor Supply and Demand 1 N 2 N w N ND NS E A increases K increases F
Econ 1110, Spring 2008, Professor Te 5 Factors that Shift the FE Line FE Line Shifter Shifts the FE Line Beneficial Productivity Shock Right Increase in Capital Stock Right Increase in Population Right Increase in Govt. Purchases (RBC Model) Right
Econ 1110, Spring 2008, Professor Te 6 Excess demand for goods IS Curve F Excess supply of goods A E IS Curve: Equilibrium in the Goods Market S d = I d Y = C d + I d + G Output, Y Real Interest Rate, r
Econ 1110, Spring 2008, Professor Te 7

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