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.

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Definitions:

Plant Assets

Long-term tangible assets that are used in the production or supply of goods and services, such as machinery, buildings, and vehicles.

Natural Resources

Assets that occur in nature, like minerals, timber, and oil, which can be used for economic benefit.

Intangible Assets

Non-physical assets owned by a business that have value, such as patents, trademarks, goodwill, and copyrights.

Normal Balance

The side (debit or credit) on which an account increases, determined by the account type in the accounting equation.