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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