Although the government's fiscal policy and monetary policy are both policy tools for the government to achieve macroeconomic policy objectives, their effects on national income are not the same, depending on the position of LM curve where the economy is when implementing policies. Generally speaking, LM curve can be divided into three areas according to slope: horizontal area, vertical area and middle area. According to the analysis of money market, the horizontal region of LM curve corresponds to the state that money demand is in the trap of flow preference, so the horizontal region of LM curve is called Keynesian region, the vertical region is also called classical region, and the middle region is in between.

Keynesian region is an extreme case on LM curve. At this time, because people's liquidity preference tends to infinity, changing the position of LM curve by changing the money supply has no effect on balancing national income, while moving is curve can make national income change to the maximum extent. Therefore, in the Keynesian region, fiscal policy is effective and monetary policy is ineffective. The classical region is the other extreme case on the LM curve. At this time, because people's speculative demand for money is close to zero, changing LM curve can reduce interest rate and improve income level, while changing IS curve will only affect interest rate. Therefore, in the classic region, monetary policy is effective, while fiscal policy is ineffective.

In the central region, the changes of IS curve and LM curve have an impact on national income. Therefore, in the central region, both fiscal policy and monetary policy are effective: in places close to Keynes, fiscal policy is more important; In places close to the classic areas, monetary policy is more important. Under normal circumstances, the government often uses both fiscal policy and monetary policy.