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Macroeconomics IS CurveMacroeconomicsIS CurveAggregate Demand Equals National Product Describing the real sector of the economy, the IS curve represents the condition that aggregate demand equals

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How to fill out is curve

01

To fill out the IS curve, follow these steps:

02

Identify the variables that determine the level of aggregate demand, such as consumption (C), investment (I), government spending (G), and net exports (NX).

03

Determine the equation that represents the relationship between these variables and the level of output (Y). The equation typically takes the form Y = C + I + G + NX.

04

Plot the equation on a graph with output (Y) on the horizontal axis and aggregate demand (AD) on the vertical axis.

05

Identify the exogenous variables that can shift the aggregate demand curve, such as changes in government policy or shifts in foreign economies.

06

Analyze the impact of these exogenous variables on the IS curve by evaluating how they affect the level of aggregate demand at each level of output.

07

Interpolate the points and draw a smooth curve that represents the relationship between aggregate demand and output. This curve is known as the IS curve.

08

Repeat the process for different values of the exogenous variables to understand how changes in these variables affect the IS curve.

Who needs is curve?

01

The IS curve is useful for economists, policymakers, and researchers who analyze the relationship between aggregate demand and output in an economy. It helps in understanding the factors that drive changes in output and how changes in policy or exogenous variables can impact the overall level of economic activity. By studying the IS curve, economists can make predictions about the effects of different policy measures on output and identify potential outcomes of economic shocks or changes in exogenous variables.

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