As long as the level of output ________ the natural rate level, the price level will continue to ________, shifting the LM curve to the ________, until finally output is back at the natural rate level.
A)exceeds; rise; right
B)exceeds; rise; left
C)remains below; fall; left
D)remains below; rise; right

Question

Quizplus · Accepted Answer

When output exceeds the natural rate, the price level rises, causing the LM curve to shift left as real money balances decrease, until output returns to the natural rate.

As Long as the Level of Output ________ the Natural