If output is below the natural rate then price level will _____, causing the _____ curve to shift right.
A) rise, IS
B) rise, LM
C) fall, IS
D) fall, LM

Name: If output is below the natural rate then price level will _____, causing the _____ curve to shift right. A) rise, IS B) rise, LM C) fall, IS D) fall, LM
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Question

Quizplus · Accepted Answer

When output is below the natural rate, the price level tends to fall, which increases real money balances and causes the LM curve to shift right.

If Output Is Below the Natural Rate Then Price Level