LM Curve in Macroeconomics: Definition & Equation

Instructions:

Choose an answer and hit 'next'. You will receive your score and answers at the end.

question 1 of 3

Which scenario shifts the LM curve to the right?

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1. Which of the following describes the purpose of the LM curve?

2. When illustrating the curve on the graph, the independent variable is....

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About This Quiz & Worksheet

The LM curve plays an important role in macroeconomics. This quiz will ask you to define the components of the LM curve, understand its purpose and determine the variables found on the LM curve graph.

Quiz & Worksheet Goals

You'll be asked to:

  • Define what LM stands for
  • Understand the purpose of the LM curve
  • Know what the independent variable is
  • Identify the dependent variable
  • Determine what the LM curve slope depends on

Skills Practiced

This quiz will help you apply the following skills:

  • Information recall - access knowledge you've gained regarding the purpose of the LM curve
  • Knowledge application - use what you know about the LM curve graph to identify its independent and dependent variables
  • Making connections - be able to connect the two elements that the LM curve slope depends on

Additional Learning

To get more info on this macroeconomic concept, check out the lesson entitled LM Curve in Macroeconomics: Definition & Equation. The lesson will help you explore the following objectives:

  • Define the variables in the LM curve equation
  • Understand the three components of money demand that John Maynard Keynes outlined
  • Learn how inflation adjustment indicates the actual purchasing power of money
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