The Interest-Rate-Based Monetary Policy Transmission Mechanism Argues That an Increase

Multiple Choice

The interest-rate-based monetary policy transmission mechanism argues that an increase in the money supply

A) has no effect on aggregate demand but reduces long-run aggregate supply.
B) has no effect on aggregate demand but increases short-run aggregate supply.
C) causes interest rates to fall, which causes an increase in planned investment, and an increase in aggregate demand.
D) causes the inflation rate to decline, which causes an increase in household consumption spending and an increase in aggregate demand.