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he LM curve is flat when money demand is very responsive to interest rates. That is, when you have a flat money demand curve. Interest rates only have to increase by a little in order to get rid of bonds since money demand is very reactive to interest rates.
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When is the LM curve relatively steep?
If money demand has low sensitivity to change in interest rate,the interest rate would have to rise by a large amount to reduce the demand for real balance back to the fixed leveli.e the level at which demand for money is equal to supply of money.Accordingly,the LM curve would be quite steep
The economy is in short-run equilibrium a. At any point on the IS curve b. Only at a point that is on both the IS and LM curves c. At any point on the LM curve. d. Only at the natural level of?
b
What happens to the shifting of LM curve when there is an increase in demand of money?
It shifts to the left
Why does the LM curve slope upwards?
In equilibrium: Money supply = Money demand.Summarizing it, we can explain the upward sloping LM curve as following:If income is high then thedemand for money will be high relative to the fixed supply. In order to equilibrate money demand and money supply, interest rates have to also be high to reduce money demand
Using the AD-AS framework what is the impact on equilibrium price and output when there are increase in aggregate demand and aggregate supply simultaneously?
AD-AS represents aggregate demand curve (AD) and aggregate supply curve (AS). "In the aggregate demand-aggregate supply model, each point on the aggregate demand curve is an outcome of the IS-LM model for aggregate demand Y based on a particular price level. Starting from one point on the aggregate demand curve, at a particular price level and a quantity of aggregate demand implied by the IS-LM model for that price level, if one considers a higher potential price level, in the IS-LM model the real money supply M/P will be lower and hence the LM curve will be shifted higher, leading to lower aggregate demand; hence at the higher price level the level of aggregate demand is lower, so the aggregate demand curve is negatively sloped
When is the LM curve relatively steep?
If money demand has low sensitivity to change in interest rate,the interest rate would have to rise by a large amount to reduce the demand for real balance back to the fixed leveli.e the level at which demand for money is equal to supply of money.Accordingly,the LM curve would be quite steep
The economy is in short-run equilibrium a. At any point on the IS curve b. Only at a point that is on both the IS and LM curves c. At any point on the LM curve. d. Only at the natural level of?
b
What happens to the shifting of LM curve when there is an increase in demand of money?
It shifts to the left
Why does the LM curve slope upwards?
In equilibrium: Money supply = Money demand.Summarizing it, we can explain the upward sloping LM curve as following:If income is high then thedemand for money will be high relative to the fixed supply. In order to equilibrate money demand and money supply, interest rates have to also be high to reduce money demand
Using the AD-AS framework what is the impact on equilibrium price and output when there are increase in aggregate demand and aggregate supply simultaneously?
AD-AS represents aggregate demand curve (AD) and aggregate supply curve (AS). "In the aggregate demand-aggregate supply model, each point on the aggregate demand curve is an outcome of the IS-LM model for aggregate demand Y based on a particular price level. Starting from one point on the aggregate demand curve, at a particular price level and a quantity of aggregate demand implied by the IS-LM model for that price level, if one considers a higher potential price level, in the IS-LM model the real money supply M/P will be lower and hence the LM curve will be shifted higher, leading to lower aggregate demand; hence at the higher price level the level of aggregate demand is lower, so the aggregate demand curve is negatively sloped
What is IS-LM?
what is IS-LM?
Why doesn't an increase in taxes change slope LM curve when a change in taxes changes which changes consumption which changes national income which changes Y and LM slope equals (k/h)Y?
... doesn't change slope :/ solved lol
Who invented the mini Scout plane?
lm; lm;
Why lm curve is positively sloped?
money supply is constant . so the money holdings will be high and banks does not have enough money to give loans. so as a result they are forced to increase the rate.
What is LM in LM series IC's?
LM is a manufacturer's code--all LM chips were made by National Semiconductor. Similarly, SN chips were made by Texas Instruments.
When was New LM created?
New LM was created in 1976.
What is an LM curve?
It is the locus of combination of the interst rate and real national income for which money demand wquals money supply.So called because it represents the points where liquidity equals the money supply.
