- Subject index
Macroeconomics Simplified explains the intuition behind Keynesian and neoclassical macroeconomics using graphs and simple algebra.
It provides students with a strong conceptual basis for understanding the tension between Keynesian and neoclassical systems that has once again came to the forefront since the 2007–08 financial crisis.
The book shows how theoretical perspectives affect macroeconomic policy choices and proposes a pragmatic approach to policy that is sensitive to prevailing economic conditions. Students of economics and business alike will enjoy its concise and engaging analysis and find the applications and references to the Indian economy helpful.
Chapter 7: Fiscal and Monetary Policies in the IS-LM Model
Fiscal and Monetary Policies in the IS-LM Model
This chapter explores the economic effects of fiscal and monetary policies within an IS-LM framework. The first section builds on the basic Keynesian interpretation developed in Chapter 6. The second section shows how the IS-LM model behaves when neoclassical assumptions are adopted.
Monetary policy in the IS-LM model refers to the alteration of the (nominal) money supply by the reserve bank. The money supply is regarded as exogenous and hence as directly controllable by the monetary authorities. Although the discussion of monetary policy is limited in the IS-LM framework, it nevertheless allows some basic exploration of the economic impact of an expanding or contracting money supply.
Fiscal policy is the management of ...