Figure 10.1 demonstrates the three lines represented by the above relationships
and the general equilibrium. Equation (10.8’’) corresponds to the MM line plotted on the S–r plane, on which the money market clears or is in equilibrium. Its positive slope is obvious, given the signs of the two partial differentials involved for the relationship. Equation (10.10’’) represents the BB line, on which the domestic
bond market clears It possesses a negative slope resulted from the signs of the
two partial differentials in the equation Equation (10.10’’) is the B*B
*
line, on
which the foreign bond market clears. Due to the fact from the identity