The interest-rate-based approach to monetary policy says that a change in the money supply influences aggregate demand by

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The interest-rate-based approach to monetary policy suggests that changes in the money supply affect interest rates, which in turn influence investment decisions and therefore aggregate demand. This occurs through changes in the cost of borrowing, which in turn can affect consumer behavior and investment decisions. Therefore, choice A is the best answer. Option B is incorrect as it only pertains to following a monetary policy rule, not how the money supply affects aggregate demand. Choice C is not accurate as changes in the money supply do not directly affect consumer behavior, but rather indirectly through changes in interest rates. Choice D is incorrect as the money supply typically affects the aggregate demand, not short-run aggregate supply.

The Interest-Rate-Based Approach to Monetary Policy Says That a Change