Which of the following statements is correct? Select one: A. The LM curve slopes

Question

Which of the following statements is correct? Select one: A. The LM curve slopes down because a higher interest rate leads to a lower income for a given money supply B. The LM curve slopes down because a higher income leads to a lower interest rate for a given money supply C. The LM curve slopes up because a higher interest rate leads to a higher income for a given money supply D. The LM curve slopes up because a higher income leads to a higher interest rate for a given money supply Previous page

Explanation / Answer

Ans) D. The LM curve slopes up because a higher income leads to a higher interest rate for a given money supply

Reason- with higher level of income the moner demanded and supplied are in equilibrium leading to high interest rate.

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