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What does the IS-LM framework mean?
The IS-LM model helps us to understand the two opposing theories. The IS (investment/saving) curve shows equilibrium in product markets. The LM (liquidity/money) curve shows equilibrium in the money market. The point at which the two curves intersect is the only combination of output and interest rates (i.e., bond yields) where both the goods and financial markets are in balance.
Wealth: This is a stock of accumulated purchasing power stored up from the past. For example, if you have a fat savings account accumulated from your past earnings, your curre
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I wont final Exam
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