Suppose the government increases its expenditures by $100 million and finances the resulting deficit by selling bonds.Then the LM curve will
A)shift rightward.
B)shift leftward.
C)become steeper.
D)None of these.

Question

Quizplus · Accepted Answer

The LM curve represents the relationship between liquidity and money in the economy, focusing on the supply and demand for money at different interest rates. An increase in government expenditures financed by selling bonds primarily affects fiscal policy and the IS curve, not the LM curve directly.

Suppose the Government Increases Its Expenditures by $100 Million and Finances