If the central bank targets interest rates,then the LM curve is
A)vertical.
B)horizontal.
C)upward sloping.
D)downward sloping.

Name: If the central bank targets interest rates,then the LM curve is A)vertical. B)horizontal. C)upward sloping. D)downward sloping.
Brand: Quizplus
Rating: 4.8 (30 reviews)

Question

Quizplus · Accepted Answer

When the central bank targets interest rates, it adjusts the money supply as needed to maintain its target rate. This means the money supply is perfectly elastic at the targeted interest rate, resulting in a horizontal LM curve.

If the Central Bank Targets Interest Rates,then the LM Curve