Suppose the demand for money becomes less sensitive to changes in the interest rate.In moving along an LM curve,an increase in income must be accompanied by a ________ change in the interest rate than before,meaning that the LM curve has become ________.
A)greater,steeper
B)greater,flatter
C)smaller,steeper
D)smaller,flatter

Question

Quizplus · Accepted Answer

When the demand for money becomes less sensitive to changes in the interest rate, an increase in income must be accompanied by a greater change in the interest rate to maintain money market equilibrium, making the LM curve steeper.

Suppose the Demand for Money Becomes Less Sensitive to Changes