+1 862 207 3288 IS Curve (Investment – Savings Curve) represents the relationship of different combinations of rate of interest and income for goods market to be in equilibrium. Here goods market equilibrium is an extension of income determination with 45-degree line. In order to study the derivation of IS curve, we need to examine investment which is no longer exogenous but is also determined by interest rate. Then the investment component is then incorporated in the Aggregate Demand (AD) framework to obtain IS curve.
