1 thought on “How to draw currency data change diagrams”
Jermaine
The drawing method is as follows: LM curve indicates the trajectory of various income and interest rate combinations in the currency market. The mathematical expression of the LM curve is M = KY-HR, which can be expressed as the relationship between Y and interest rate R under the balance of the currency market. The graphic of this relationship is called LM curve. In addition, any point on this line represents a combination of interest rates and income. In such a combination, the demand and supply of currency are equal, that is, the currency market is balanced. LM curve introduction: (1) The slope is positive, indicating that the LM curve is generally tilted to the upper right. Generally speaking, in the currency market, the combination of income and interest rates on the right of the LM curve is an unbalanced combination. In this combination, currency demand exceeds the supply of currency. The combination of income and interest rates on the left of the LM curve is an unbalanced combination, of which currency demand is less than the currency supply. On the LM curve, only the combination of income and interest rates is a balanced combination of currency demand equal to the supply of currency supply. (M = m /p, that is, the actual currency supply is determined by the nominal currency supply M and the price level p) (2) The change in currency supply will cause the LM curve to move to the right. When currency supply increases, the demand for currency should be equal to supply, and demand should increase. The demand for currencies increases only when income increases or interest rate declines. If the interest rate remains unchanged, the income will increase; if the income remains unchanged, the interest rate will decline. This means that the LM curve moves to the right. (3) The change in the price level can also cause the LM curve to move. Because the change in price levels can cause changes in the actual currency stock. The rise in price level means the decrease in the actual amount of currency, so the LM curve will move to the left, and vice versa.
The drawing method is as follows:
LM curve indicates the trajectory of various income and interest rate combinations in the currency market. The mathematical expression of the LM curve is M = KY-HR, which can be expressed as the relationship between Y and interest rate R under the balance of the currency market. The graphic of this relationship is called LM curve. In addition, any point on this line represents a combination of interest rates and income. In such a combination, the demand and supply of currency are equal, that is, the currency market is balanced.
LM curve introduction:
(1) The slope is positive, indicating that the LM curve is generally tilted to the upper right. Generally speaking, in the currency market, the combination of income and interest rates on the right of the LM curve is an unbalanced combination. In this combination, currency demand exceeds the supply of currency. The combination of income and interest rates on the left of the LM curve is an unbalanced combination, of which currency demand is less than the currency supply. On the LM curve, only the combination of income and interest rates is a balanced combination of currency demand equal to the supply of currency supply. (M = m /p, that is, the actual currency supply is determined by the nominal currency supply M and the price level p)
(2) The change in currency supply will cause the LM curve to move to the right. When currency supply increases, the demand for currency should be equal to supply, and demand should increase. The demand for currencies increases only when income increases or interest rate declines. If the interest rate remains unchanged, the income will increase; if the income remains unchanged, the interest rate will decline. This means that the LM curve moves to the right.
(3) The change in the price level can also cause the LM curve to move. Because the change in price levels can cause changes in the actual currency stock. The rise in price level means the decrease in the actual amount of currency, so the LM curve will move to the left, and vice versa.