IS-LM
Business & Finance abbreviation · Economics
| Stands for | Investment-saving / liquidity preference-money supply model |
|---|---|
| Categories | Business & Finance |
IS-LM stands for Investment-saving / liquidity preference-money supply model, an economics abbreviation.
Macroeconomic model showing the combinations of interest rates and output at which the goods market (the IS curve) and the money market (the LM curve) are both in equilibrium. It is used to analyze the effects of fiscal and monetary policy.
Example: In the IS-LM framework, a fiscal expansion shifts the IS curve right, raising both output and interest rates.
Usage notes
John Hicks introduced the model in 1937 as an interpretation of Keynes's General Theory, and Alvin Hansen popularized it. Because modern central banks set interest rates rather than the money supply, many textbooks now replace the LM curve with a monetary policy rule. The open-economy extension is the Mundell-Fleming model.
Related abbreviations
More economics abbreviations
- GNI – Gross national income
- GNP – Gross national product
- GVA – Gross value added
- HDI – Human Development Index
- HHI – Herfindahl-Hirschman Index
- HICP – Harmonised Index of Consumer Prices
- JOLTS – Job Openings and Labor Turnover Survey
- LDC – Least developed country
- LFPR – Labor force participation rate
- LMIC – Low- and middle-income countries
- MC – Marginal cost
- MFN – Most favored nation