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For this question, we say that money demand is more sensitive to interest rates if a given decline in interest rates induces a larger increase

For this question, we say that money demand is more sensitive to interest rates if a given decline in interest rates induces a larger increase in money demand. In response to a temporary decline in the foreign interest rate, the size of the appreciation of the home currency in the short-run (a) is independent of the sensitivity of money demand to interest rates. (b) is smaller the more sensitive is money demand to interest rates. (c) is larger the more sensitive is money demand to interest rates. (d) can be higher or lower the more sensitive is money demand to interest rates. (e) can be negative if money demand is very sensitive to interest rates

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