When the money supply increase ?
Correct answer: D. The LM curve shift to the right
- A. the economy moves up the LM curve
- B. The LM curves shifts to the left
- C. The economy moves down the LM curve
- D. The LM curve shift to the right
Explanation
An increase in the money supply shifts the LM curve to the right because more money is available at each interest rate. It does not represent movement along the existing LM curve.
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The economy is studied as a whole through national income, gross domestic product, inflation, unemployment, economic growth and business cycles. Coverage includes aggregate demand and supply, consumption and investment, money and banking, fiscal and monetary policy, exchange rates and balance of payments, which distinguishes macroeconomics from the study of individual markets.
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