Economics Q106

0. As the price level increases along the aggregate demand curve, the interest rate is most likely to:

  • Option : B
  • Explanation : An increase in the price level decreases the real money supply and shifts the LM curve to the left. Since the IS curve is downward sloping, the IS and LM curves will intersect at a lower level of income and a higher interest rate.
Cancel reply

Your email address will not be published. Required fields are marked *


Cancel reply

Your email address will not be published. Required fields are marked *