Because of a widespread fraud,people have decided not to use their debit card for their purchases anymore.This will cause
A)the LM curve to shift down and to the right.
B)the LM curve to shift up and to the left.
C)the IS curve to shift down and to the right.
D)the IS curve to shift up and to the left.

Question

Quizplus · Accepted Answer

The LM curve shows the relationship between the interest rate and the money supply. A widespread fraud would cause people to lose confidence in the banking system and reduce their demand for money. This would shift the LM curve to the left, as people would be willing to hold less money at any given interest rate.

Because of a Widespread Fraud,people Have Decided Not to Use