The IS curve

Loanable funds market
     equilibrium

Real interest rate, r

Desired national saving, S,
and desired investment, I

Output, Y

Real interest rate, r

Levels of output, Y

Deriving the IS curve

Investment Curve, I

A = Intersect(xAxis, yAxis)
B = Point(yAxis)
a = Segment(A, B)
C = Point(xAxis)
b = Segment(A, C)
D = Point(xAxis)
E = Point(xAxis)
c = Segment(D, E)
F = (7, 7)
d = Segment(D, F)
e = 4000 (slider from 4000 to 7000, step 10)
f = If(0.5 < x < 5.5, 5 - x^(0.75))
g = If(1 + (e - 4000) / 1000 < x < 3 + (e - 4000) / 1000, (x - (e - 4000) / 1000)^(1.5))
t: (e - 4000) / 1000
G: (2.9 + t, g(2.9 + t))
H = Intersect(f, g, (2.1754737103838293, 3.2087121525161253))
I = Intersect(f, g, (2.1754737103838293, 3.2087121525161253))
J: (8 + t, y(H))
K: (0, y(H))
L: (7, y(H))
h = Segment(K, J)
M: (x(J), 0)
i = Segment(M, J)
text3: "Y=" + e + ""
n: (y(H) - 1.098) / 0.264
text4: "" + n + "%"
text5: "" + n + "%"
text1: "Savings curve, S when (Y=" + e + ")"
N: (x(H), 0)
j = Segment(H, N)
text11: "(" + e + "," + n + "%)"
O: (5, f(5))