As the LM Curve Becomes Flatter, an Unexpected Increase in Consumer

question 17

Multiple Choice

As the LM curve becomes flatter, an unexpected increase in consumer confidence:

• A) will cause a relatively small increase in output and relatively small increase in the interest rate.
• B) is more likely to cause stock prices to fall.
• C) is more likely to keep stock prices constant.
• D) is more likely to cause stock prices to rise.
• E) will cause a relatively large increase in output and relatively large increase in the interest rate.

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