A financial innovation,such as money market mutual funds,which increases the liquidity of alternatives to money,would
A)increase money demand,shifting the LM curve up.
B)increase money demand,shifting the LM curve down.
C)decrease money demand,shifting the LM curve up.
D)decrease money demand,shifting the LM curve down.

Question

Quizplus · Accepted Answer

Financial innovations that increase the liquidity of alternatives to money typically decrease money demand, causing the LM curve to shift down.

A Financial Innovation,such as Money Market Mutual Funds,which Increases the Liquidity