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Illustrate and explain what happens to the LM curve when prices increase? What is happening in...

Illustrate and explain what happens to the LM curve when prices increase? What is happening in the money market that causes the LM curve to shift?

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When the price increase , the LM curve shift to the left . because, when the price increases, then the poeple will buy less as they have to give more money than they were paying before or in other words people need more money to pay for the higher prices.. an increases in the price level cause to decrease in the money supply in the money market which causes the LM curve to shift . the increase price level shifts the money line inward which cause to shift the LM curve upward or to the left.

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