Assume That Interest Rates Drop and GDP Increases as a Result

Multiple Choice

Assume that interest rates drop and GDP increases as a result of expansionary monetary policy.What should happen to the demand for real money balances?

A) it should increase
B) it should decrease since interest rates will decrease
C) it will remain unaffected since income will go up but the interest rate will go down
D) it will remain unaffected since the income velocity of money does not change
E) we can't tell for sure since we do not know what will happen to the income velocity of money