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Explain what can cause MS curve shifts.

Explain what can cause MD curve shifts.

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1 vote

Answer:

Ms

Step-by-step explanation:

Monetary stimulus, that is, increasing the money supply, causes the LM curve to shift right, resulting in higher output and lower interest rates. Fiscal stimulus, that is, increasing government spending and/or decreasing taxes, shifts the IS curve to the right, raising interest rates while increasing output.

User Paulus Potter
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Answer:

MS: Monetary stimulus, that is, increasing the money supply, causes the LM curve to shift right, resulting in higher output and lower interest rates. Fiscal stimulus, that is, increasing government spending and/or decreasing taxes, shifts the IS curve to the right, raising interest rates while increasing output.

MD: When the quantity of money demanded increase, the price of money (interest rates) also increases, and causes the demand curve to increase and shift to the right. A decrease in demand would shift the curve to the left.

I hope this helps! If you need more explanation, just let me know and I will try to explain it differently.

User Julien Vavasseur
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