An increase in the money supply will cause
A)the IS curve to shift down and to the right.
B)the IS curve to shift up and to the left.
C)the LM curve to shift down and to the right.
D)the LM curve to shift up and to the left.

Question

Quizplus · Accepted Answer

An increase in the money supply shifts the LM curve down and to the right because it lowers interest rates for a given level of income, increasing the equilibrium level of income and output.

An Increase in the Money Supply Will Cause