In the Keynesian model,
A) the IS curve shows all points of informational symmetry between buyers and sellers
B) the IS curve represents international symbiosis between economies
C) the LM curve shows equilibrium positions in the goods market
D) the LM curve gives the locus of points at which imports equal exports
E) the LM curve shows where the supply and demand for money are equal

Question

Quizplus · Accepted Answer

In the Keynesian model, the LM (liquidity preference and money supply) curve shows where the supply and demand for money are equal, indicating the equilibrium position in the money market. Option A is incorrect because the IS curve represents equilibrium in the goods market, not information symmetry between buyers and sellers. Option B is incorrect since there is no representation of international symbiosis in the Keynesian model. Option C is incorrect as equilibrium positions in the goods market are represented by the IS curve, not the LM curve. Option D is incorrect because the equality of imports and exports is represented by the balance of payments, not the LM curve.

In the Keynesian Model