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      Question

      Which of the following is incorrect regarding LM

      curve?
      A Each point of LM curve shows an interest-income level at which demand for money is equal to supply for money Correct Answer Incorrect Answer
      B The slope of the LM curve depends on responsiveness of demand for money to the changes in income Correct Answer Incorrect Answer
      C The slope of LM curve depends on the elasticity demand for money to the changes in rate of interest. The higher the elasticity the steeper the curve. Correct Answer Incorrect Answer
      D LM curve shifts to the right when the stocks of money supply increased Correct Answer Incorrect Answer
      E LM curve shifts to the left if there is decrease in money demand function Correct Answer Incorrect Answer

      Solution

      The slope of LM curve also depends on the elasticity demand for money (liquidity preference) to the changes in rate of interest. The lower the elasticity the steeper the curve. Covered in videos and study notes; snapshot from study notes of the ixamBee SEBI course

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