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Question

A central bank decides to increase money supply. For a given price level, the LM curve is expected to

A Shift down and to the right as the real money supply rises Correct Answer Incorrect Answer
B Shift up and to the left as the real money supply falls Correct Answer Incorrect Answer
C Shift down and to the right as the real money supply falls Correct Answer Incorrect Answer
D Shift up and to the left as the real money supply rises Correct Answer Incorrect Answer
E None of the above Correct Answer Incorrect Answer

Solution

A central bank decides to increase money supply. For a given price level, the LM curve is expected to shift down and to the right as the real money supply rises.

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