If Money Demand Is Extremely Sensitive to Changes in the Interest

Multiple Choice

If money demand is extremely sensitive to changes in the interest rate, the money demand curve becomes almost horizontal.If the Bank of Canada expands the money supply under these circumstances, then the interest rate will

A) fall substantially and investment and consumer spending will fall substantially.
B) rise substantially and investment and consumer spending will rise substantially.
C) fall substantially and investment and consumer spending will change very little.
D) change very little and investment and consumer spending will change very little.