If the Demand Function for Money Is M / P

question 47

Multiple Choice

If the demand function for money is M / P = 0.5Y - 100r, then the slope of the LM curve is:

• A)0.001.
• B)0.005.
• C)0.01.
• D)0.05.

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Definitions:

Central Focus

The primary point of interest or activity in a given context or discussion.

Bads

Items or factors that negatively impact societal welfare or personal well-being, often considered the opposite of goods.

Goods

Tangible products or commodities that satisfy human wants and provide utility.

Mental Accounting

The tendency people have to create separate “mental boxes” (or “accounts”) in which they deal with particular financial transactions in isolation rather than dealing with them as part of an overall decision-making process that would consider how to best allocate their limited budgets across all possible options by using the utility-maximizing rule.