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The IS curve shows the causation from interest rates to planned investment to national income and output. For the investment–saving curve, the independent variable is the interest rate and the dependent variable is the level of income. The IS curve is drawn as downward-sloping with the interest rate r on the vertical axis and GDP (gross ...
The IS curve moves to the right if spending plans at any potential interest rate go up, causing the new equilibrium to have higher interest rates (i) and expansion in the "real" economy (real GDP, or Y). In most mathematical contexts, the independent variable is placed on the horizontal axis and the dependent variable on the vertical axis.
In economics and particularly in consumer choice theory, the income-consumption curve (also called income expansion path and income offer curve) is a curve in a graph in which the quantities of two goods are plotted on the two axes; the curve is the locus of points showing the consumption bundles chosen at each of various levels of income.
The Keynesian cross diagram is a formulation of the central ideas in Keynes' General Theory of Employment, Interest and Money.It first appeared as a central component of macroeconomic theory as it was taught by Paul Samuelson in his textbook, Economics: An Introductory Analysis.
The traditional LM curve is upward sloping because the interest rate and output have a positive relationship in the money market: as income (identically equal to output in a closed economy) increases, the demand for money increases, resulting in a rise in the interest rate in order to just offset the incipient rise in money demand.
Only risk neutral investors are in the system. The demand for money therefore depends only on income and the interest rate, and investment depends on the interest rate. The country under consideration is so small that the country cannot affect foreign incomes or the world level of interest rates.
Inverted yield curves happen when bonds with shorter maturity periods have higher yields than bonds with longer maturity periods. Under normal circumstances, it’s the other way around.
Income–consumption curve; Indifference curve; Inverted yield curve; IS–LM model; ... Media in category "Economics curves" This category contains only the ...