At a point above the LM curve,
A)there is an excess demand for money.
B)there is an excess supply of nonmoney assets.
C)the real interest rate is above its equilibrium level.
D)there is an excess demand for goods.

Question

Quizplus · Accepted Answer

At a point above the LM curve, the interest rate level is higher than the equilibrium level, which means there is excess supply of money and therefore excess demand for nonmoney assets. This causes the interest rate to increase to bring the money market back into equilibrium.

At a Point Above the LM Curve