Hence, the "bad news" case holds if al < qk/l, which is likely if the LM curve is relatively steep (as the monetarists would have it). Equation (4.48) also implies that an increase in the money supply shifts the 4 = 0 line up and to the right. Also, the dynamics of q for points off the 4 = 0 line is destabilizing:

(4.48)

(4.49)

( aq—

am q > 0, = Rs > 0. q=0 1P Rs a q (4.50)