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      Question

      In the context of the ISLM model, what would cause the

      LM curve to shift to the right?
      A An increase in the money supply. Correct Answer Incorrect Answer
      B A decrease in government spending. Correct Answer Incorrect Answer
      C An increase in the interest rate. Correct Answer Incorrect Answer
      D A decrease in the level of income. Correct Answer Incorrect Answer
      E An increase in the savings rate. Correct Answer Incorrect Answer

      Solution

      An increase in the money supply would shift the LM curve to the right, indicating a higher level of income for a given interest rate due to increased liquidity.

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