If a central bank wants to stimulate economic activity through expansionary monetary policy, What will happen to real money balances in the long run and investment spending?
1) Real money balances will be unaffected in the long run and investment spending will decrease.
2) Real money balances will decrease in the long run and investment spending will increase.
3) Real money balances will increase in the long run and investment spending will decrease.
4) Real money balances will increase in the long run and investment spending will increase.