A change that increases the real money supply relative to real money demand causes
A)the LM curve to shift down.
B)the LM curve to shift up.
C)the IS curve to shift down.
D)the IS curve to shift up.

Question

Quizplus · Accepted Answer

An increase in real money supply will lower the interest rates, leading to an increase in investment and consumption, thus shifting the IS curve up. The lower interest rates will also cause the LM curve to shift down.

A Change That Increases the Real Money Supply Relative to Real