Choose ONE of the following (A., B., or C.; answer only ONE. If more than one short-answer question is answered, only the FIRST will be graded). The quality of your answer will determine your grade: A.What is meant by the "interest rate effect" and why does it help to explain the shape of the aggregate demand curve? B. Eli receives $200 in cash for his birthday and deposits the money in his checking account at River Town Bank. a. How does this deposit initially change the T-account of River Town Bank? How does it affect the money supply? b. If the bank maintains a reserve ratio of 15%, how will River Town respond to the new deposit? c. If every time River Town makes a loan, the loan results in a new checkable deposit in a different bank equal to the amount of the loan, by how much could the money supply in the economy expand in total? C. In a simple economy with no government and no foreign sector, autonomous consumer spending is $100 and planned investment spending is $300. The marginal propensity to consume is 0.75. a. Solve for the equilibrium level of real GDP. b. If real GDP is $2,000, what is unplanned inventory investment?