An increase in the money supply shifts the ______ curve to the right, and the aggregate demand curve ______.
A) IS; shifts to the right
B) IS; does not shift
C) LM: shifts to the right
D) LM; does not shift

Question

Quizplus · Accepted Answer

An increase in the money supply would shift the LM curve to the right, as there would be more money available in the economy. This would lead to lower interest rates, which would increase investment and consumption, ultimately shifting the aggregate demand curve to the right.

An Increase in the Money Supply Shifts the ______ Curve