If the money supply increases, everything else held constant, the ________ curve shifts to the ________.
A)IS; right
B)IS; left
C)LM; left
D)LM; right

Question

Quizplus · Accepted Answer

An increase in the money supply would decrease the interest rate, shifting the LM curve to the right. This is because there is more money available for lending, leading to increased competition among borrowers and lower interest rates. The IS curve would not shift in this scenario since it represents the relationship between interest rates and investment demand, which would not be affected in this case.

If the Money Supply Increases, Everything Else Held Constant, the ________