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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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