Each point on the LM curve represents the equilibrium point in the ?
Correct answer: B. money market for different combinations of interest rates and output
- A. money market for the given level of the money supply
- B. money market for different combinations of interest rates and output
- C. goods market for the given level of government spending
- D. goods market for the given interest rate
Explanation
Every point on the LM curve shows money-market equilibrium for a particular combination of income or output and the interest rate, given the money supply. The IS curve instead represents goods-market equilibrium.
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The economy is studied as a whole through national income, gross domestic product, inflation, unemployment, economic growth and business cycles. Coverage includes aggregate demand and supply, consumption and investment, money and banking, fiscal and monetary policy, exchange rates and balance of payments, which distinguishes macroeconomics from the study of individual markets.
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