When the central bank sets the interest rate rather than control the money supply directly, the LM curve is flat (parallel to X - axis). This is because of which of the following ?
1
Money supply is varied by the central bank to maintain the target interest rate
2
Money supply is fixed by the central bank to maintain the target interest rate
3
Money supply is varied by the central bank to alter interest rate
4
Money supply is fixed by the central bank to alter interest rate