In the standard IS-LM model, we replace the assumption of exogenous money supply with an endogenous money supply as an increasing function of interest rate. Now the LM curve will :
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JNU SIS 2020 Question 21: IS-LM model
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IS-LM model has come up 137 times in 7 exams since 2004.
What this question tests
This question is on Deriving the LM curve and its slope, part of IS-LM model in Macroeconomics.
How money market equilibrium gives an upward-sloping relation between interest rate and income.
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