What does ESM ESG EDM EDG stand for in the IS-LM model of Western economics?

ESM stands for Excessive Money Supply; ESG stands for Excessive Product Supply; EDM stands for Excessive Money Demand ;EDG stands for Excessive Product Demand;

Hicks created a graphical framework (the IS--LM model) that illustrates the equilibrium of unemployment and is similar to today's textbook AS --AD is also similar.

Classical theory, total income is determined by C+I+NX (consumption+investment+net exports), of which I=S (investment=savings) is one of the most important assumptions, this assumption determines that the economy is intrinsically stable in the framework of the classical theory, and that increasing taxes and expanding fiscal spending to stimulate the economy will only crowd out private consumption and investment, and will not have any effect on total income.

Deeper, total income is actually determined by the level of technology and other exogenous variables, so the aggregate supply curve is a vertical straight line, printing money can only make prices increase, the total product of social production is unchanged. Here you can see that the classical model defaults to the idea that all productive resources in society can be fully utilized. In other words, as long as prices are allowed to change arbitrarily to clear prices, the economy will self-regulate to a stable state,

Keynes's revolution in classical theory changed this "somber discipline". He was the first to introduce human psychology into economic analysis, which may have had something to do with the fact that Keynes was himself an extremely successful investor. He introduced the concept of psychicity: the marginal propensity to save increases with income. Thus, when national income grows, there is a disproportionate increase in savings.

In Keynes's mind, saving is not the same as investment, only savings are used by business and industry, that is called investment, put under the mattress or in the bank safe, are the loss and leakage of the whole economy, so that the total income will not reach the potential level, that is, there is idle capital and involuntary unemployment. That's when government spending G is needed to balance the economy and raise "effective demand" without jeopardizing consumption and investment.

Another Keynesian revolution was the introduction of price stickiness in the short run, where the price level P is constant in the short run and, moreover, the supply of money is balanced by the demand for money. With these conditions, enough to begin to model the ISLM.