A decrease in the interest rate causes

Name: A decrease in the interest rate causes
Brand: Quizplus
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Question

Quizplus · Accepted Answer

A decrease in the interest rate causes a movement down the LM curve because the LM curve represents the relationship between the interest rate and the level of income that equates the demand for and supply of money. Lower interest rates make holding money more attractive relative to bonds, increasing the demand for money at any given level of income, which is represented by a downward movement along the LM curve.

A Decrease in the Interest Rate Causes