If the Fed Reduces the Money Supply by 5 Percent

Multiple Choice

If the Fed reduces the money supply by 5 percent and the quantity theory of money is true, then:

A) every point on the aggregate demand curve moves 5 percent to the left.
B) every point on the aggregate demand curve moves up 5 percent.
C) the aggregate demand curve moves down and to the left, but it is impossible to determine exactly by how much.
D) the aggregate demand curve moves up and to the right, but it is impossible to determine exactly by how much.