Which two of the following statements correctly describes the slope of the IS and LM curves in the IS-LM model?
(A) The IS curve will be steeper if the interest sensitivity of investment is higher.
(B) The IS curve will be flatter when the marginal propensity to consume is higher.
(C) The LM curve is steeper if the demand for money is less sensitive to changes in the interest rate.
(D) The LM curve will be flatter if the responsiveness of money demand to income is lower.
(E) The IS and LM curve will be steeper if the marginal propensity to consume is higher.
1
A,B and E
2
B and C
3
B,D and E
4
A and C