Speculators and fully anticipated expansionary monetary policy problem

[Bipolarity]

http://img39.imageshack.us/img39/6386/macro2.jpg

I don't understand the answer to this question.
The answer is

Spoiler

C

but I don't understand why.

BiP

 

[Alesak]

Hi,
I guess this is question on New classical macroeconomics, which deals with this stuff. See http://ies.fsv.cuni.cz/default/file/download/id/19819 this presentation for explanation.

 

[John Creighto]

Looks like C from the above power point. Of course that assumes an equal distribution of new money (the helicopter effect) which is not really the case as is pointed out in, “The case against the fed”.