In the New Keynesian View, an Increase in Real Money

Multiple Choice

In the new Keynesian view, an increase in real money balances increases investment spending by

A) giving business firms more funds to invest.
B) raising the real interest rate, which makes saving and investing more attractive.
C) lowering the real interest rate, which reduces the opportunity cost of investing in new plant and equipment.
D) allowing the government to increase its spending on bridges, highways, and other public works.