Understanding Equilibrium in the IS/LM Model

The author still worries, however, that the student is memorizing the equilibrium condition, IS=LM generates Ye, without really understanding why the condition works. Most students are unable to explain why setting IS equal to LM generates the equilibrium level of output. I have, on rare occasion, heard a student give the following explanation: "Along the IS curve the goods market is in equilibrium; along the LM curve the money market is in equilibrium. Therefore, for both markets to be in equilibrium, the system must be on both curves. This only occurs at the intersection of the curves." That's pretty good, and it's the explanation I used in Notes on Macroeconomic Theory; but I still worry that there is too little understanding and too much memorization. I very much want to get across true, complete comprehension of this fundamental macro tool known as the IS/LM graph. To do this, I undertake a detailed analysis of the meaning of equilibrium in the IS/LM Model in the pages that follow.