If the ________ curve is relatively more unstable than the ________ curve,a money supply target is preferred.
A)IS;IS
B)IS;LM
C)LM;IS
D)LM;LM

Question

Quizplus · Accepted Answer

The IS curve represents the relationship between interest rates and real GDP, while the LM curve represents the relationship between interest rates and the money supply. If the IS curve is relatively more unstable than the LM curve, then a change in the money supply will have a greater impact on real GDP than a change in interest rates. In this case, a money supply target is preferred because it will provide a more stable level of real GDP.

If the ________ Curve Is Relatively More Unstable Than the ________

If the Curve Is Relatively More Unstable Than the