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Simple macroeconomic frameworks like the IS/LM have survived because they help us conceptualize complex problems while also providing ‘back of the envelope’ estimates of macroeconomic outcomes. Herein, a bare-bones New Keynesian extension of the IS/LM model yields solutions for core macro variables (output gap, inflation, interest rate, real exchange rate misvaluation)—expressed in percent. We then extend that standard model to also generate a corresponding set of demand-side elements—expressed in currency units. A key aim of the paper is to reconcile these two metrics in ways that also aid communication and intuition—including through IS/LM-style graphs.

Banks and Banking --- Exports and Imports --- Foreign Exchange --- Macroeconomics --- Production and Operations Management --- Economics Education and Teaching of Economics: Undergraduate --- General Aggregative Models: Keynes --- Keynesian --- Post-Keynesian --- Forecasting and Simulation: Models and Applications --- Interest Rates: Determination, Term Structure, and Effects --- Macroeconomics: Production --- Trade: General --- Macroeconomics: Consumption --- Saving --- Wealth --- Currency --- Foreign exchange --- Finance --- International economics --- Real exchange rates --- Real interest rates --- Output gap --- Exports --- Consumption --- Interest rates --- Production --- Economic theory --- Economics