If the economy is at full employment, anything that causes the level of income to change will cause fluctuations in the __________ that will shift the __________ curve and thus help stabilize economic activity

Question

Quizplus · Accepted Answer

The LM curve represents the relationship between liquidity (money supply and demand) and interest rates, which is influenced by changes in the price level. When the economy is at full employment, changes in income levels can affect the demand for money, which in turn affects interest rates and shifts the LM curve, helping to stabilize economic activity.

If the Economy Is at Full Employment, Anything That Causes