Assume That Investment Spending Depends Only on the Interest Rate

Multiple Choice

Assume that investment spending depends only on the interest rate and no longer depends on output. Given this information, a decrease in money supply:

A) will cause investment to increase.
B) may cause investment to increase or to decrease.
C) will have no effect on output.
D) will cause a reduction in output and have no effect on the interest rate.
E) will cause investment to decrease.