A contractionary 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

A contractionary monetary policy reduces the money supply, which increases interest rates and reduces output. This shift in the LM curve is represented by a leftward movement. Therefore, the correct choice is A: left; output and increasing interest rates.

A Contractionary Monetary Policy Shifts the LM Curve to the ________,Reducing