Equilibrium in the money market, Macroeconomics

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Equilibrium in the money market

In the IS-LM-model, we have equilibrium in the money market when

MD(Y, R) = MS

This is the equation from money market and we have already one equation from aggregate demand which is,

YD(Y, R) = C(Y) + I(R) + G + X - Im(Y)

Now we will conclude all endogenous variables in the IS-LM model:

Y_D(Y, R) = Y equilibrium in the goods market

M_D(Y, R) = M_S equilibrium in the money market

Now we have two equations and two unknown (Y and R) and in most cases we can find a unique solution to system of equations.

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