Suppose the economy is currently operating on both the IS curve and the LM curve. Which of the following is true for this economy?

Question

Quizplus · Accepted Answer

The IS-LM model represents the equilibrium in both the goods and financial markets. The IS curve represents equilibrium in the goods market, where production equals demand. The LM curve represents equilibrium in the financial market, where the money supply equals money demand and the quantity supplied of bonds equals the quantity demanded for bonds. Therefore, all of the above statements are true for this economy.

Suppose the Economy Is Currently Operating on Both the IS