Keynesians believe in a relatively stable __________ curve, and thus recommend a monetary policy targeting the __________.

Question

Quizplus · Accepted Answer

Keynesians believe in a stable LM curve, which shows the relationship between interest rates and the level of income. Therefore, they recommend a monetary policy targeting the interest rate (which is represented on the LM curve) rather than the money supply (which is represented on the IS curve).

Keynesians Believe in a Relatively Stable __________ Curve, and Thus