<p>In the standard LM Model money supply is a vertical line and money demand is a decreasing function (in the interest rate - money framework). An increase in the money supply curve shifts the supply curve to the right which ceteris paribus decreases the intersect with the demand curve which leads to a lower interest rate. </p>

CC BY-SA 3.0
2018-03-02T15:39:29.220Z
2018-03-02T15:51:36.803Z
2018-03-02T15:51:36.803Z
PAS
<p>why does an increase in money supply , lower the interest rate and shift the LM curve down.?</p>

CC BY-SA 3.0
2018-03-02T23:34:17.510Z
This is college economics , you can discuss the advanced stuff in your head buddy. Vote off !
statisticsinquisitive
<macroeconomics><keynesian-economics>
Macroeconomics- money supply LM model
statisticsinquisitive
# Macroeconomics- money supply LM model

(Asked by: username_0 on 2018-03-02)

why does an increase in money supply , lower the interest rate and shift the LM curve down.?

**Tags:** macroeconomics, keynesian-economics

> **Comments:**
> **username_0**: This is college economics , you can discuss the advanced stuff in your head buddy. Vote off !  

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## 1 answers

### Answer by username_1 on 2018-03-02. Score: 3

In the standard LM Model money supply is a vertical line and money demand is a decreasing function (in the interest rate - money framework). An increase in the money supply curve shifts the supply curve to the right which ceteris paribus decreases the intersect with the demand curve which leads to a lower interest rate.


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