Found this page after I typed 'ISLM for dummies' in google. Drives me crazy as well. Glad to see someone else struggling.
I dont get the very last bit: increase the supply of money and the interest rate must fall to induce people to hold a larger quantity
Why 'induce'. If you shovel out more money, interest rates (price of money) go down; but this is caused by the supply and demand for money, not as something being done to 'induce' people.
Drives me nuts too
I dont get the very last bit:
increase the supply of money and the interest rate must fall to induce people to hold a larger quantity
Why 'induce'. If you shovel out more money, interest rates (price of money) go down; but this is caused by the supply and demand for money, not as something being done to 'induce' people.