The LM Curve Slopes Upward to the Right Because

question 20

Multiple Choice

The LM curve slopes upward to the right because

• A)the demand for money plus the demand for nonmoney assets must equal the supply of money plus the supply of nonmoney assets.
• B)a higher real interest rate is associated with a higher level of the output gap in money market equilibrium.
• C)a higher real interest rate is associated with a higher level of saving in goods market equilibrium.
• D)in equilibrium the actual real interest rate must increase one-for-one with expected real interest rate.