Final answer:
In the Keynesian zone of the AD/AS Model, an increase in the money supply leads to a rightward shift in aggregate demand and lower interest rates, making investment more sensitive and causing real GDP to rise.
Step-by-step explanation:
When the economy is operating in the horizontal portion of the Aggregate Supply (AS) curve within the Keynesian AD/AS Model, it is in the Keynesian zone where real GDP is far below potential GDP. In this situation, if the money supply increases, causing a shift in aggregate demand to the right, investment becomes more sensitive due to lower interest rates. As a result, real GDP is expected to rise, as there is ample idle capacity to meet the increase in demand without causing a rise in the price level. Thus, in the Keynesian transmission mechanism, the correct answer to the student's question is that investment is interest-sensitive; real GDP will rise.