Which of the following will cause the LM curve to shift to the right?

Question

Quizplus · Accepted Answer

An increase in the money supply will cause the LM curve to shift to the right. This is because an increase in the money supply will lower interest rates, which in turn will increase investment and consumption and shift the aggregate demand curve to the right. This will cause an increase in output and a higher equilibrium level of income, which will be reflected in a shift to the right of the LM curve. The other options are incorrect because an increase in money demand or a decrease in velocity will shift the demand for money curve to the right and shift the LM curve to the left, and an increase in investment alone will not necessarily shift the LM curve unless it is accompanied by other changes in the economy.

Which of the Following Will Cause the LM Curve to Shift