The LM Curve Has A

Multiple Choice

The LM curve has a:

A) positive slope because a higher interest rate leads to a decrease in the demand for money and thus a higher level of domestic production is needed to cause people to continue to hold the same amount of money.
B) negative slope because a lower interest rate leads to an increase in the demand for bonds and thus a higher level of domestic production is needed to cause people to continue to hold the same amount of money.
C) negative slope because a lower interest rate leads to a decrease in foreign investments and thus a higher level of domestic production is needed for equilibrium.
D) positive slope because a higher interest rate leads to a higher incentive to hold money and thus a higher money supply is needed for equilibrium.