IS-LM Model
Also called: IS LM, IS-LM curve, Hicks-Hansen model
The IS-LM model plots the combinations of interest rate and output where goods markets clear (IS) and money markets clear (LM), with their intersection giving short-run equilibrium. It's the standard classroom tool for showing how fiscal expansion raises rates and crowds out investment, and how monetary policy loses traction in a liquidity trap where the LM curve is flat.
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