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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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