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Questions › JNU › JNU SIS 2011 › Q16
4 marks, −1Macroeconomics › IS-LM model › Deriving the IS curveModerateabout 3 min

JNU SIS 2011 Question 16: IS-LM model

Consider the following aggregate demand system :

Md=AD−rMdP=MsPAD=C+I+GC=1+0.5YI=1−0.5YM^d = AD - r \qquad \frac{M^d}{P} = \frac{M^s}{P} \qquad AD = C + I + G \qquad C = 1 + 0.5Y \qquad I = 1 - 0.5YMd=AD−rPMd​=PMs​AD=C+I+GC=1+0.5YI=1−0.5Y

Derive the equations for the IS and LM curves.

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Consider the following aggregate demand system: M^d = AD - r M^d/P = M^s/P AD = C + I + G C = 1 + 0.5Y I = 1 - 0.5Y Derive the equations for the IS and LM curves. (A) Y = 8 + r - G; Y = 4M^s/P - 2 - 2G - 6r (B) Y = 4 + r - 2G; Y = 2M^s/P + 4 + 2G - 3r (C) Y = 4 - r + 2G; Y = 2M^s/P - 4 - 2G + 3r (D) Y = 2 - r + 4G; Y = M^s/P + 2 + G - r

IS-LM model has come up 137 times in 7 exams since 2004.

What this question tests

This question is on Deriving the IS curve, part of IS-LM model in Macroeconomics.

How the goods market gives a downward-sloping relation between the interest rate and income.

TestStop has 15 past-paper questions on this subtopic; the nearest in year are below.

  • IIT JAM 2021 · Q1When the expected future marginal product of capital increases, then the IS curve
Practise IS-LM modelMore on Deriving the IS curve

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Question from the JNU SIS 2011 paper. Solutions are TestStop's own. Not affiliated with or endorsed by any examination authority.