If the price level decreases so that the real money supply increases,
A) the IS curve will shift to the right and the equilibrium levels of the real interest rate and real GDP will increase.
B) the IS curve will shift to the left and the equilibrium levels of the real interest rate and real GDP will decrease.
C) the LM curve will shift to the left and the equilibrium level of the real interest rate will increase and the equilibrium level of real GDP will decrease.
D) the LM curve will shift to the right and the equilibrium level of the real interest rate will decrease and the equilibrium level of real GDP will increase.
Correct Answer:
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