Based on the Keynes Theory, The IS-LM model, which stands for “investment-saving” (IS) and “liquidity preference- Money Supply” (LM) is a Keynesian macroeconomic model that shows how the market for economic goods (IS) interacts with the loanable funds market (LM) or money market. It is represented as a graph in which the IS and LM curves intersect to show the short-run equilibrium between interest rate and output.