The liquidity-money (LM) curve shows the alternative combinations of interest rates and real income that clears the money market

Suppose all tickets to the World Series have already been sold. Will any further sales occur if the going price rises?

A) No, and therefore a higher price will have no effect. B) No, but a smaller quantity will be demanded. C) Not unless more tickets are printed. D) Yes, as some ticket-holders sell to others. E) Yes, but the further sales will reduce the price to the original level.

The United States' balance of payments is likely to improve when

A) there is an increase in political instability in other countries. B) the inflation rate in the United States rises relative to other countries. C) the American government increases its spending on foreign aid. D) American people want to invest more in foreign countries.