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The LM curve is steeper the ______ the interest sensitivity of money demand and the ______...

The LM curve is steeper the ______ the interest sensitivity of money demand and the ______ the effect of income on money demand.

a. greater; greater

b. greater; smaller

c. smaller; smaller

d. smaller; greater
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Answer #1

If the LM curve is steeper in the market the interest rate will not affect the interest rate sensitivity of money demand and the effect of the income on the money demand will also be low. The answer is "C", Smaller; smaller.

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