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7) IS Schedule PDF
7) IS Schedule PDF
7) IS Schedule PDF
November 4, 2015
Muhammad Irwan Ariffin Product Market Equilibrium: The IS Schedule November 4, 2015 1 / 13
Outline
3 IS with Government
5 Conclusion
Muhammad Irwan Ariffin Product Market Equilibrium: The IS Schedule November 4, 2015 2 / 13
Construction of the IS Schedule
Y =C +I +G (1)
Equivalent condition:
I +G=S+T (2)
Use equation (2) to construct the product market equilibrium
schedule: the IS schedule
IS schedule: combinations of income (Y ) and interest rate (r) that
equilibrate the product market
Muhammad Irwan Ariffin Product Market Equilibrium: The IS Schedule November 4, 2015 3 / 13
Construction of the IS Schedule
Muhammad Irwan Ariffin Product Market Equilibrium: The IS Schedule November 4, 2015 4 / 13
IS Curve Slope Determinant Slope of Investment Schedule
Muhammad Irwan Ariffin Product Market Equilibrium: The IS Schedule November 4, 2015 5 / 13
IS Curve Slope Determinant Slope of Saving Schedule (MPS)
Muhammad Irwan Ariffin Product Market Equilibrium: The IS Schedule November 4, 2015 6 / 13
IS with Government
Muhammad Irwan Ariffin Product Market Equilibrium: The IS Schedule November 4, 2015 7 / 13
IS Curve Shift Determinants
Muhammad Irwan Ariffin Product Market Equilibrium: The IS Schedule November 4, 2015 8 / 13
IS Curve Shift Determinants Changes in Government Spending
G = S = (1 b)Y |r0
1
Y |r0 = G (5)
1b
Refer to Figure 6-14 in textbook
Muhammad Irwan Ariffin Product Market Equilibrium: The IS Schedule November 4, 2015 9 / 13
IS Curve Shift Determinants Changes in Taxes
Changes in Taxes
IS Curve Shift Determinants
Muhammad Irwan Ariffin Product Market Equilibrium: The IS Schedule November 4, 2015 10 / 13
IS Curve Shift Determinants Changes in Taxes
Changes in Taxes
IS Curve Shift Determinants
Muhammad Irwan Ariffin Product Market Equilibrium: The IS Schedule November 4, 2015 12 / 13
Conclusion
Conclusion
Product Market Equilibrium: The IS Schedule
Muhammad Irwan Ariffin Product Market Equilibrium: The IS Schedule November 4, 2015 13 / 13