17. An more people use credit card for daily transaction, money demand declines. This will shift...
17. An more people use credit card for daily transaction, money demand declines. This will shift the:
a. IS curve to the right.
b. LM curve to the right.
c. FE curve to the right.
d. LM curve to the left.
Homework Answers
Answer : The answer is option b.
When money demand decrease then the LM curve shift to rightward. Because when money demand decrease then the interest rate fall and at this lower interest rate the LM curve shift to rightward. Hence except option b other options are not correct. Therefore, option b is the correct answer.
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