Which of the following is true about the LM curve?

Question

Quizplus · Accepted Answer

The LM curve slopes upward for a given level of the money supply. This is because as the interest rate falls, the demand for money increases, and there is a higher quantity of money demanded at each interest rate level. Therefore, to maintain equilibrium, the money supply must increase, resulting in an upward-sloping LM curve. A is incorrect because the equality between actual and planned expenditure is represented by the IS curve. B is incorrect because the LM curve is not directly related to a given level of income, but rather to the interest rate. D is incorrect because the LM curve does not exist in the classical model.

Which of the Following Is True About the LM Curve