Is Lm Model On Economics Of The Twentieth Century

IS-LM Model Mr. Keynes and the â€Å"Classics†; A Suggested Interpretation is a classic journal written by John R. Hicks, who has left huge impact on Economics of the twentieth century. John Hicks introduced the beginning of â€Å"IS-LM economic model†, which set up basic system of Macroeconomics to the world through this journal. This journal could be considered as an attempt to interpret and reassess Mr. Keynes’ General Theory of Empoyment within the typical â€Å"classic† theory framework and compare Keynes’ view and classical economists’ view. Mr. Hicks starts with setting the typical classical theory in a form that is similar to that where Mr. Keynes does his. He makes the same assumptions for the theory as Mr. Keynes does, which is first, the quantity of factors of production is all fixed and second, only homogeneous labor is counted and the last, depreciation can be neglected. Consequently, Mr. Hicks comes up with three equations. 1. M = kI, where M is the given quantity of money and I is the total income. This suggests that the quantity of money and the total income depend on the other. 2. Iχ = C(i), where Iχ is the amount of investment and i is the rate of interest. This explains investment is determined by the interest rate. 3. Iχ = S(i, I). The last equation is driven as saving equals investment, which is, again, determined by the interest rate. John Hicks then presents the three equations from Mr. Keynes’s General Theory of Employment that are a bit different from the onesShow MoreRelatedNepal : A Small Beautiful Country With Highest Mountain Essay10303 Words   |  42 Pagescountries. Two giant countries China and India are the closest neighbors in the north and south who are becoming economically very strong and powerful, but Nepal is economically very weak in trade, tourism, industrialization, technology and other various economic spheres. 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