Fiscal Policy within the IS-LM Framework

Undoubtedly, what happens to the economy affects the lives of the citizens of a country, and often the lives of people in other countries around the globe. In addition to natural disasters two things affect the economy more than anything else: monetary and fiscal policies.

Fiscal policy and monetary policy represent forms of government intervention to influence market performance. Fiscal policy relates to government spending and revenue collection; monetary policy relates to the supply of m...