Answer to Question #238527 in Microeconomics for Azmir

Question #238527
if real money balance decrease, what will be it's effects on interest rate and LM curve?
1
Expert's answer
2021-09-20T10:21:20-0400

Decrease in real money balance causes a shortage of money at the existing interest rate. Making the interest rate to increase in order to discourage people from holding money


Real money balance decrease makes the LM curve shift to the left.


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