Consider an Economy with Flexible Exchange Rates

Multiple Choice

Consider an economy with flexible exchange rates. If there are high levels of inflation in the economy, then the appropriate monetary policy would be to ________ the money supply, which will cause the ______ curve to shift ________.

A) increase; the LM; left
B) decrease; the LM; right
C) decrease; the LM; left
D) increase; the IS; left