The LM Curve Has A

question 2

Multiple Choice

The LM curve has a:

• A)positive slope because a higher interest rate leads to a decrease in the demand for money and thus a higher level of domestic production is needed to cause people to continue to hold the same amount of money.
• B)negative slope because a lower interest rate leads to an increase in the demand for bonds and thus a higher level of domestic production is needed to cause people to continue to hold the same amount of money.
• C)negative slope because a lower interest rate leads to a decrease in foreign investments and thus a higher level of domestic production is needed for equilibrium.
• D)positive slope because a higher interest rate leads to a higher incentive to hold money and thus a higher money supply is needed for equilibrium.

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Definitions:

Life Cycle

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Life Cycle

The series of phases that an organism, product, or service goes through from its beginning to its end, encompassing growth, maturity, and decline stages.