Which of the following is not a true statement?
A)The higher the income level, the lower interest rates must be for goods market equilibrium.
B)The higher the income level, the higher interest rates must be for money market equilibrium.
C)The higher the income level, the lower the interest rate must be for external balance to be achieved.
D)Equilibrium occurs at the intersection of the IS, LM, and BP curves.

Question

Quizplus · Accepted Answer

Explanation: Statement C is incorrect because typically, for external balance to be achieved, especially in the context of maintaining a stable current account balance or preventing excessive capital outflows, higher income levels might necessitate higher interest rates to attract or retain capital, not lower. The other statements align with economic theories: A) and B) relate to the basic principles of the goods and money markets respectively, where higher income levels can lead to different needs for interest rate adjustments to maintain equilibrium; D) is a fundamental concept in macroeconomics where the IS curve (investment-savings), LM curve (liquidity preference-money supply), and BP curve (balance of payments) intersect to indicate a general equilibrium in the economy.

Which of the Following Is Not a True Statement