11) Along an LM curve at higher income levels the transactions demand for money is __________, so the interest rate must be __________ to equate the demand to the fixed supply of money. A) higher; higher B) higher; lower C) lower; higher D) lower; lower 12) Along an LM curve at lower income levels the transactions demand for money is __________, so the interest rate must be __________ to equate the demand to the fixed supply of money. A) higher; higher B) higher; lower C) lower; higher D) lower; lower 13) Along an LM curve at higher interest rates there is __________ money demanded, so income must be higher to __________ the demand for transactions balances if the total demand for money is to equal the fixed supply. A) less; decrease B) less; increase C) more; decrease D) more; increase 14) Along an LM curve at lower interest rates there is __________ money demanded, so income must be lower to __________ the demand for transactions balances if the total demand for money is to equal the fixed supply. A) less; decrease B) less; increase C) more; decrease D) more; increase 15) Liquidity preference theory indicates that at lower interest rates A) investment is greater. B) money demand is greater. C) consumption is greater. D) money supply is greater. 16) For an individual LM curve, the money supply is assumed to A) be constant. B) grow at a rate equal to the interest rate. C) grow at a rate equal to the growth rate in income. D) grow at a rate equal to the marginal propensity to consume. 17) Which of the following influences the slope of the LM curve? A) The interest-sensitivity of money demand B) The interest-sensitivity of investment C) The interest-sensitivity of government spending D) The interest-sensitivity of saving 18) The slope of the LM is not influenced by A) the gap between money demand and supply. B) the interest rate sensitivity of money supply. C) the interest rate sensitivity of money demand. D) The slope of the LM curve is influenced by all of the above. 19) In the LM curve, the __________ the interest-sensitivity of liquidity preference, the __________ the necessary increase in the rate of interest to restore equilibrium. A) greater; smaller B) greater; greater C) smaller; smaller D) None of the above. 20) The slope of the LM curve will be steeper the __________ is the income-sensitivity of the demand for money and the __________ is the interest-sensitivity of the demand for money. A) less; less B) less; greater C) greater; less D) greater; greater