BECC-103(EM) 2025-26

• IS Curve: Shows equilibrium in the goods market; downward sloping; shifts with fiscal policy. • LM Curve: Shows equilibrium in the money market; upward sloping; shifts with monetary policy. • Points outside curves: Indicate temporary disequilibrium; markets adjust through changes in output (IS) or interest rate (LM) to restore equilibrium. • The intersection of IS and LM gives the simultaneous equilibrium in goods and money markets, determining income (Y) and interest rate (i) in the short run.