The Linkages of the Interest-Rate-Based Transmission Mechanism of Monetary Policy

Multiple Choice

The linkages of the interest-rate-based transmission mechanism of monetary policy are summarized as follows:

A) change in the money supply → change in speculative balances → change in transactions balances → change in planned investment → change in aggregate demand.
B) change in the money supply → change in planned investment → change in government spending → change in aggregate demand.
C) change in the money supply → change in interest rates → change in planned investment → change in aggregate demand.
D) change in the money supply → change in interest rates → change in transactions balances → change in government spending → change in aggregate demand.