Question

Match List-I with List-II:

List I	List II
(A) IS-LM Model	Combines Keynesian cross and elements of the theory of liquidity preference (II)
(B) IS Curve	Shows the points that satisfy equilibrium in the goods market (I)
(C) Intersection of IS and LM	Shows the interest rate and income that satisfy equilibrium in both markets for a given price level (IV)
(D) LM Curve	Shows the points that satisfy equilibrium in the money market (III)

Choose the correct answer from the options given below:

• (A) - (I), (B) - (II), (C) - (III), (D) - (IV)
• (A) - (III), (B) - (IV), (C) - (II), (D) - (I)
• (A) - (I), (B) - (II), (C) - (IV), (D) - (III)
• (A) - (III), (B) - (IV), (C) - (I), (D) - (II)

Hint:

IS-LM analysis shows equilibrium in both goods and money markets and their interaction.

Answer 1

The Correct Option is B

The IS-LM model explains the interaction of the goods market (IS curve) and the money market (LM curve).
- (A) IS-LM Model (III): Shows equilibrium in the money market.
- (B) IS Curve (IV): Shows equilibrium in both markets.
- (C) Intersection of IS and LM (II): Combines the Keynesian cross and liquidity preference theory.
- (D) LM Curve (I): Represents equilibrium in the goods market.