In IS-LM-FE analysis, expansionary monetary policy:
A)leads to lower interest rates.
B)leads to higher interest rates.
C)lowers levels of GDP.
D)shifts the LM curve to the left.

Question

Quizplus · Accepted Answer

Expansionary monetary policy causes an increase in the money supply, which results in lower interest rates as people have more funds to lend or save. This causes the LM curve to shift to the right, resulting in an increase in GDP.

In IS-LM-FE Analysis, Expansionary Monetary Policy