Respuesta :
In the IS-LM model when government spending rises, in short-run equilibrium, in the usual case, the interest rate rises and output rises.
A two-dimensional macroeconomic tool called the IS-LM model, commonly known as the Hicks-Hansen model, illustrates the connection between interest rates and the market for assets (also known as real output in goods and services market plus money market). The "investment-saving" (IS) and "liquidity preference-money supply" (LM) curve intersections represent "universal equilibrium," which is the idea that both the asset and goods markets are simultaneously in equilibrium. Nonetheless, there are two comparable interpretations that may be made: first, the IS-LM model explains variations in national income when the price level is fixed in the short run; and second, the IS-LM model explains why an aggregate demand curve might change. As a result, this method is sometimes used to indicate potential levels for effective stabilization interventions in addition to analyzing economic volatility.
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