Is monetary policy effective in combating stagflation?

How does monetary policy influence consumer spending? Discuss.

How do changes in interest rates impact consumer spending, business investment, and overall economic activity, and how does the central bank use interest rates as a tool of monetary policy? A) Changes in interest rates have no effect on economic activity. B) Lower interest rates typically encourage consumer borrowing and business investment, stimulating economic activity. The central bank uses interest rate adjustments as a tool to influence borrowing and spending. C) Higher interest rates boost economic activity by increasing consumer savings. D) Changes in interest rates only affect government spending.

Why do Keynesian economics believe increasing the money supply is a good idea? Use the equation of exchange in this answer.