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:

Anal Stage

The attachment of libido to the anus.

Psychosexual Development

A Freudian concept outlining how personality develops through stages centered around the libido's focus on different body areas.

Age Range

The age interval from the youngest to the oldest age considered for a particular group or activity.

Castration Anxiety

The male child’s fear of being castrated by the father.