Which of the Following Will Allow Monetary Policy to Be

Multiple Choice

Which of the following will allow monetary policy to be most effective in changing aggregate demand?  

A)  Interest rates need to be responsive to changes in the money supply, and investment needs to be sensitive to changes in interest rates. 
B)  Interest rates need to be responsive to changes in the money supply, but investment does NOT need to be sensitive to changes in interest rates. 
C)  Interest rates do NOT need to be responsive to changes in the money supply, but investment does need to be sensitive to changes in interest rates. 
D)  Interest rates do NOT need to be responsive to changes in the money supply, and investment does NOT need to be sensitive to changes in interest rates.