Against Which LM Curve Listed Here Does a Change in Goods

question 30

Multiple Choice

Against which LM curve listed here does a change in goods market spending have the greatest impact in moving GDP around in the short run?

• A) A vertical LM curve
• B) A steeply sloped LM curve
• C) A gently sloped LM curve
• D) A horizontal LM curve
• E) Not determinable from the information provided

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Definitions:

Liquidity

The ease with which an asset can be converted into cash without affecting its market price.

Profitability

Refers to a company's ability to generate income relative to its revenue, operating costs, and other expenses over a certain period.

Solvency

The ability of a business to meet its long-term debts and financial obligations.

Liquidity Ratio

A financial metric used to determine a company's ability to pay off its short-term liabilities with its available liquid assets.