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In equilibrium: Money supply = Money demand.
Summarizing it, we can explain the upward sloping LM curve as following:
If income is high then the
demand 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
What else can I help you with?
What direction does the supply curve slope from the left to right?
Supply curves do not always slope from left to right. A supply curve can slope from the right and when this happens this means that there is a surplus of goods at a lower price.
Why does the LM curve have a positive slope?
The LM curve has a positive slope because as interest rates increase, the quantity of money demanded decreases. This is because higher interest rates make borrowing more expensive, leading to a decrease in investment and consumption, which in turn reduces the demand for money.
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
Is demand curve canbe upwardly sloping?
A demand curve can have an upwards slope. It solely depends on if the demand for an item is high or low.
What determines the slope of IS Curve?
mainly the slope of Is curve depends on ; -the slope of investment schedule -the size of the multiplier
What direction does the supply curve slope from the left to right?
Supply curves do not always slope from left to right. A supply curve can slope from the right and when this happens this means that there is a surplus of goods at a lower price.
What determines the slope of the LM curve?
The slope of the LM curve is determined by the responsiveness of the demand for money to changes in interest rates, which is influenced by the liquidity preference of individuals and businesses. Specifically, a steeper LM curve indicates that money demand is less sensitive to interest rate changes, while a flatter curve suggests greater sensitivity. Factors such as income levels, expectations about future economic conditions, and the overall liquidity of the financial system also play significant roles in shaping the slope. Ultimately, the LM curve reflects the relationship between the real money supply and interest rates in the economy.
Why does the LM curve have a positive slope?
The LM curve has a positive slope because as interest rates increase, the quantity of money demanded decreases. This is because higher interest rates make borrowing more expensive, leading to a decrease in investment and consumption, which in turn reduces the demand for money.
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
Is demand curve canbe upwardly sloping?
A demand curve can have an upwards slope. It solely depends on if the demand for an item is high or low.
The derivative finds the of a curve?
The gradient of the tangents to the curve.
What determines the slope of IS Curve?
mainly the slope of Is curve depends on ; -the slope of investment schedule -the size of the multiplier
How do you find the slope of a graph if it is a curve?
You find the slope of the tangent to the curve at the point of interest.
What is the slope of a curve?
Slope of a Curve A number which is used to indicate the steepness of a curve at a particular point.The slope of a curve at a point is defined to be the slope of the tangent line. Thus the slope of a curve at a point is found using the derivative
How do you calculate slope of a curve?
If the curve is on the xy-plane, finding an expression for dy/dx will give you the slope of a curve at a point.
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
How do you find the slope of an Indifference curve?
You find the tangent to the curve at the point of interest and then find the slope of the tangent.
