How to Analyse the Internal and External Balances? | BOP | Economics

For analysing the internal and external balances through the synthesis between monetary and fiscal policies, the IS (Investment-Saving) function, the LM (Liquidity preference - Money supply) function and the BOP function (B) are to be derived as below: Derivation of IS Function: The investment-saving function (IS) in an open system is determined on the assumption that the real market is [...]