IS/LM: Deriving Aggregate Demand (Part II: the LM Curve)

There are four articles on IS/LM: Synopsis Part 1: the IS curve Part 2: the LM curve (you are here) Part 3: combining the IS and LM curves The LM Curve The key to understanding the Liquidity preference-Money supply (LM) curve is realizing that the underlying assumption is that financial markets are in equilibrium: demand […]