IS-LM model: Description of a LM-curve
Channel: econom
Date: 21/12/2015

The LM curve shows different combinations of interest rates and levels of output where the financial market is in equilibrium. Financial market equilibrium exists when the supply of money is equal to the demand for money. It is important to note that the LM curve represents the financial market and at any given point on a LM curve the financial market is in equilibrium.