For an individual LM curve, the money supply is assumed to

Question

Quizplus · Accepted Answer

In the individual LM curve, the money supply is assumed to be constant. The LM curve represents the combinations of interest rates and income levels for which the money market is in equilibrium. It shows the relationship between the interest rate and the level of income where the demand for money equals the supply of money. Therefore, in the individual LM curve, the assumption is made that the money supply is fixed and does not change regardless of changes in interest rates or income levels.

For an Individual LM Curve, the Money Supply Is Assumed