If the Demand for Real Money Balances Does Not Depend

question 129

Multiple Choice

If the demand for real money balances does not depend on the interest rate, then the LM curve:

• A) slopes up to the right.
• B) slopes down to the right.
• C) is horizontal.
• D) is vertical.

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Definitions:

Settlement

The conclusion of a transaction or the resolution of a claim or dispute, usually involving the transfer of funds or assets.

Clean-Up Provision

A clause in a financial contract that requires the borrower to pay off a loan or line of credit in full after a specified period or under certain conditions, to ensure the credit line is periodically brought to a zero balance.

AASB 137

An Australian accounting standard that deals with the accounting for provisions, contingent liabilities, and contingent assets.