When the Federal Reserve decreases the growth of the money supply, the income afect causes the interest rate to while the liquidity effect drives the interest rate Continuing on the same tran thought when the Fed decreases the growth rate of the money supply the price level ofect drives the interest rate while the expected inflation rate pushes the interest rate Suppose there is an increase in the growth rate of the money supply the liquidity effect is smaller than the income, price level, and expected infation efects, and inflationary expectations adjust slowly, then in the short run interest rates O A changed OB become predictable OC. OD tal