Final answer:
The statement is false; the IS-LM model assumes the price level is fixed but determines national income endogenously, not exogenously as suggested.
Step-by-step explanation:
The statement that The basic IS-LM model takes the price level and national income as exogenous is False. The IS-LM model actually assumes that the price level is fixed or constant in the short run; however, it does not take the national income as exogenous. Instead, national income is viewed as an endogenous variable that the model solves for. In other words, national income is determined within the model by the intersection of the IS (Investment-Savings) and LM (Liquidity Preference-Money Supply) curves. The IS-LM model, therefore, is used to determine the equilibrium level of national income (or GDP) at a given price level.
The expenditure-output model, another framework within Keynesian economics, focuses on the total amount of spending in the economy and is more likely to disregard aggregate supply and price levels; this is different from the IS-LM approach. Keynesian analysis suggests that aggregate demand is often the main driver of short-term economic fluctuations, and that wages and prices can be sticky, leading to adjustments in quantities, like output and employment, rather than prices.