What is the difference between a Classical LM curve and a Keynesian LM curve?

Question:

What is the difference between a Classical LM curve and a Keynesian LM curve?

LM Curve:

The LM curve shows the different combination of interest rate and income when the money market is in equilibrium. A normal LM curve is an upward sloping curve which states the direct relationship between interest rate and income.

Answer and Explanation:

The Classical LM curve is a vertical LM curve, as classical theory argues that there is an upper-level interest rate where all the surplus income is...

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The Money Market: Money Supply and Money Demand Curves

from Economics 102: Macroeconomics

Chapter 11 / Lesson 10
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