An expansionary monetary policy shifts the LM curve to the ________,reducing ________,everything else held constant.
A)left;output and increasing interest rates
B)left;both real output and interest rates
C)right;both interest rates and real output
D)right;interest rates and increasing real output

Question

Quizplus · Accepted Answer

An expansionary monetary policy involves increasing the money supply, which leads to a decrease in interest rates. This, in turn, encourages investment and borrowing, leading to an increase in real output. Therefore, the LM curve will shift to the right, reducing interest rates and increasing real output.

An Expansionary Monetary Policy Shifts the LM Curve to the ________,Reducing