The money hypothesis suggests that the Great Depression was caused by a:
A) leftward shift in the IS curve.
B) rightward shift in the IS curve.
C) leftward shift in the LM curve.
D) rightward shift in the LM curve.

Question

Quizplus · Accepted Answer

The money hypothesis states that a decrease in the money supply shifts the LM curve to the left, leading to higher interest rates and lower output. Therefore, choice C (a leftward shift in the LM curve) is the best answer.

The Money Hypothesis Suggests That the Great Depression Was Caused