In a two sector model, let , , and . The LM equation will be
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CUET-PG 2026 Question 16: IS-LM model
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Plain-text version
In a two sector model, let C = 60 + 0.80y, I = 116 - 2i, L = 0.20y - 5i and M = 120. The LM equation will be (A) i = 0.04y - 24 (B) i = 0.10y + 88 (C) i = 0.04y + 24 (D) i = 0.10y - 88
IS-LM model has come up 137 times in 7 exams since 2004.
What this question tests
This question is on Deriving the LM curve and its slope, part of IS-LM model in Macroeconomics.
How money market equilibrium gives an upward-sloping relation between interest rate and income.
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