The Direct Effect of an Increase in the Money Supply

Multiple Choice

The direct effect of an increase in the money supply is that

A) people will spend the extra money, causing the aggregate demand curve to shift to the left and resulting in a recession.
B) people will save the money, causing an increase in bank deposits with the result that interest rates will increase.
C) people will save more money, causing a decrease in economic activity and a fall in prices.
D) people will spend the extra money, causing the aggregate demand curve to shift to the right and resulting in a boost to economic activity.