The IS/LM model (Investment—Saving / Liquidity preference—Money supply) is a macroeconomic tool that demonstrates the relationship between interest rates and real output in the goods and services market and the money market. The intersection of the IS and LM curves is the "general equilibrium" where there is simultaneous equilibrium in both markets.
Read more about IS/LM Model: History, Formation, Shifts, Incorporation Into Larger Models
Famous quotes containing the word model:
“The playing adult steps sideward into another reality; the playing child advances forward to new stages of mastery....Child’s play is the infantile form of the human ability to deal with experience by creating model situations and to master reality by experiment and planning.”
—Erik H. Erikson (20th century)