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Old 11-08-2007, 09:05 AM
Psy_Mike Psy_Mike is offline
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Join Date: May 2005
Posts: 384
Default Macroeconomics - The LM/IS model thingy

So, the LM/IS model used in macroeconomics..

Been trying for a few days to figure out why the a specific curve is only plotted a graph in 2 dimensions instead of 3. Our tutor said that the the function for Investment is given buy the variables 'i' (interest rate) and 'Y' (income), and presented this as I(i,Y), but plotted only 2 dimensions (i and I). The third variable Y only leads to shifts of the curves. Why is this? Is it because Y is exogenous? This is probably really simple..
 


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