Suppose the Central Bank Engages in Expansionary Monetary Policy That

Multiple Choice

Suppose the central bank engages in expansionary monetary policy that results in higher money growth. This higher money growth will cause which of the following in the medium run?

A) Lower real interest rates and lower nominal interest rates.
B) Lower real interest rates and higher nominal interest rates.
C) Higher real interest rates and higher nominal interest rates.
D) Higher real interest rates and lower nominal interest rates.
E) No change in real interest rates and higher nominal interest rates.