If the Fed increases the money supply by $40 billion, will it have a bigger or smaller impact on GDP than in Question 6 above when we make the following changes?  For each of the changes, calculate the increase in GDP.

Change A: A $40 billion increase in the money supply reduces the interest rate by 1/2 percent.
Change B: A 1 percent decrease in the interest rate increases investment spending by $80 billion.
Change C: The spending multiplier is 2.0.
Change D: Prices do rise when aggregate demand increases.

Data From Question 6:

While using the Keynesian model, describe the effect of a $40 billion increase in the money supply under these conditions: (a) a $40 billion increase in the money supply reduces the interest rate by 1 percent, (b) a 1 percent decrease in the interest rate increases investment spending by $60 billion, (c) the spending multiplier is 2.5, and (d) the economy is on the horizontal segment of its aggregate supply curve, so prices do not rise when aggregate demand increases.