Refer to the information provided in Figure 11.5 below to answer the questions that follow. Figure 11.5
-Refer to Figure 11.5. An increase in the price level shifts the ________ to the ________.
A) Fed rule; right
B) IS curve; right
C) IS curve; left
D) Fed rule; left

Question

Refer to the information provided in Figure 11.5 below to answer the questions that follow.  Figure 11.5
-Refer to Figure 11.5. An increase in the price level shifts the ________ to the ________.
A) Fed rule; right 
B) IS curve; right 
C) IS curve; left 
D) Fed rule; left

Quizplus · Accepted Answer

An increase in the price level typically leads to a decrease in real money balances, which causes the Fed to increase interest rates to maintain its target, shifting the Fed rule to the left.

Refer to the Information Provided in Figure 11