Practice mode Money, Interest Rates And Output

Which curve shows the positive relationship between equilibrium aggregate output and the interest rate in the money market?

Correct answer B. LM curve

Explanation

Higher output raises the demand for money; with a fixed money supply, the interest rate must rise to restore balance, giving the upward-sloping LM curve.

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Which curve shows the positive relationship between equilibrium aggregate output and the interest rate in the money market?

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Which curve shows the positive relationship between equilibrium aggregate output and the interest rate in the money market?

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