eco-1002 · Short-run output and interest
IS-LM (Guided Walkthrough)
Same content as the IS-LM lesson, but presented as a chunked guided reader — one idea per step, with a check-yourself question after each.
Learning objectives
- Derive the IS curve from goods-market equilibrium.
- Derive the LM curve from money-market equilibrium.
- Predict how Y* and r* respond to fiscal and monetary shocks.
Where we are headed
The IS-LM model gives us the equilibrium output (Y) and interest rate (r) in a closed economy. By the end of this walkthrough you should be able to predict how Y and r move when the government changes spending (fiscal policy) or the central bank changes the money supply (monetary policy).
We'll get there in five short steps, each followed by a quick check.
Check yourself
In one sentence: what does the IS-LM model determine?
After the walkthrough
If this guided format worked well for you, the same content is also available as the classic IS-LM lesson in single-scroll form. Try the practice quiz when you’re ready.