If the money demand function is given by M^d = 10 + 0.2Y − 10r then a 10-unit increase in the quantity of money will cause the LM schedule to shifts to

Question

Quizplus · Accepted Answer

A 10-unit increase in the money supply shifts the LM curve to the right. The money demand function shows that for every 1 unit increase in money supply, the LM curve shifts by 1/0.2 = 5 units. Therefore, a 10-unit increase shifts it by 10 * 5 = 50 units to the right.

If the Money Demand Function Is Given by Md =

If the Money Demand Function Is Given by M^d =