Of the Following Comments Related to Equilibrium Level in an IS-LM

question 52

Essay

Of the following comments related to equilibrium level in an IS-LM model, which best denotes the logical causality, and why?
A. The goods and services market as denoted by IS curve gives an equilibrium level of Y, which when posited in the LM curve gives the equilibrium level of r.
B. The goods and services market as denoted by the IS curve gives an interest rate as a function of Y which helps solve for equilibrium in the money market.
C. The equilibrium rate of interest as determined by the demand for real balances for a given level of money supply in the money market helps determine the equilibrium level of investment that finally helps reach an equilibrium level of income.

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Definitions:

For Statement

A control flow statement in programming used for iterating over a range, array, or collection.

Multi-way If-else

A control flow statement that allows for multiple paths of execution based on the evaluation of several conditions.

Algorithm

A finite sequence of well-defined instructions, typically to solve a class of problems or perform a computation.

Boolean Equation

A Boolean equation is an algebraic expression that represents logical operations, composed of Boolean variables and logical operators, yielding true or false outcomes.