6. In the Keynesian model, monetary policy would be ineffective as a tool to stimulate demand if

(a) the economy were in the liquidity trap as evidenced by a perfectly horizontal demand for money schedule,

(b) investment were insensitive to a decline in the interest rate as indicated by a completely vertical investment schedule, or

(c) banks failed to extend loans, expanding the money supply, even though the monetary authorities created excess reserves. Each of these three extreme cases is highly unlikely to occur in the real world.