An increase in the money supply,other things equal,shifts the ________ curve to the ________.

Question

Quizplus · Accepted Answer

An increase in the money supply shifts the LM (Liquidity Preference-Money Supply) curve to the right. This is because an increase in the money supply lowers the interest rate at which banks lend money to each other, leading to an increase in the supply of loanable funds and a corresponding decrease in the interest rate. As a result, investment spending increases, leading to a shift in the IS (Investment-Saving) curve to the right.

An Increase in the Money Supply,other Things Equal,shifts the ________