Combining the IS and monetary policy curves gives us the aggregate supply curve.

Question

Quizplus · Accepted Answer

Combining the IS and monetary policy curves gives us the IS-MP curve, which shows the combination of output and interest rates that are consistent with both equilibrium in the goods market and equilibrium in the money market. The aggregate supply curve is a separate curve that shows the relationship between the overall level of prices and the quantity of output that firms are willing to produce.

Combining the IS and Monetary Policy Curves Gives Us the Aggregate