An increase in the money supply shifts the MP curve to the right, causing the interest rate to ________ and output to ________, everything else held constant.
A) rise; rise
B) rise; fall
C) fall; rise
D) fall; fall

Question

Quizplus · Accepted Answer

An increase in the money supply shifts the monetary policy (MP) curve to the right, which lowers interest rates and increases output, as lower interest rates encourage borrowing and investment.

An Increase in the Money Supply Shifts the MP Curve