Don Patinkin modified this model by substituting the aggregate supply function, and Robert Mundell introduced foreign trade to it.
McCallum and Nelson added a term regarding expected future income in order to fully optimize this model and apply it to business cycles. Don Patinkin modified this model by substituting the aggregate supply function, and Robert Mundell introduced foreign trade to it. The Lucas critique argues that it cannot be used to predict the effects of a change in government economic policy. Construction of it may begin with a "cross" popularized by Alvin Hansen, for whom this model is sometimes named. The liquidity trap occurs if one of the curves in this model is nearly horizontal. For 10 points, name this macroeconomic model that plots equilibrium curves for both goods and money, elucidated in the 1937 paper "Mr. Keynes and the Classics" by John Hicks.
McCallum and Nelson added a term regarding expected future income in order to fully optimize this model and apply it to business cycles.
IS-LM model