Assume that the Fed is targeting interest rates. If a desirable new ty

Assume that the Fed is targeting interest rates. If a desirable new type of bank deposit increases the demand for money at a given level of income and the rate of interest, then

a. shocks to money demand will affect income.
b. a negative shock to money demand will not affect income.
c. inflation will decrease as the money supply decreases.
d. both a and c.
e. None of the above

ANSWER

B