Which of the following statements about the LM curve is correct?

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Economics · Macroeconomics

Verified Solution4 OptionsUpdated: October 2026👁️1 View

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Correct answer

The LM curve will be relatively steep if the interest elasticity of money demand is relatively low.

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Answer 1

All of the above statements are correct.

Answer 2

The LM curve will shift upward to the right with a shift in the money demand function that increases money demand.

Answer 3

The LM curve will shift downward to the right with a decrease in the quantity of money.

Answer 4

The LM curve will be relatively steep if the interest elasticity of money demand is relatively low.

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