The LM Curve Shows Combinations of ______ That Are Consistent

question 68

Multiple Choice

The LM curve shows combinations of ______ that are consistent with equilibrium in the market for real money balances.

• A) inflation and unemployment
• B) the price level and real output
• C) the interest rate and the level of income
• D) the interest rate and real money balances

---

Definitions:

Large Firms

Companies or enterprises that operate on a large scale, often having considerable market power and resources.

Economy

The structure of economic activity in a community, a region, a country, a group of countries, or the world

Normative Economic Statement

A statement that reflects an opinion, which cannot be proved or disproved by reference to the facts.

Hypothesis

A theory about how key variables relate.