equilibrium in the money market in the

Question

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.