An increase in the price level causes
A) the LM curve to shift to the right.
B) the LM curve to shift to the left.
C) the IS curve to shift to the right.
D) the IS curve to shift to the left.
E) no change in an IS-LM representation of an economy.

Question

Quizplus · Accepted Answer

An increase in the price level reduces the real money supply, leading to higher interest rates to equilibrate the money market, which is represented by a leftward shift of the LM curve in the IS-LM model.

An Increase in the Price Level Causes