Interest Rates and Money Supply

In school, I was taught that the government can only control one of the following: Interest Rates or Money Supply.

If the government is to fix the interest rate, it has to let the money supply expand or contract as the market demands. Similarly, if the government is to fix the money supply, it has to let the interest rate swing freely.

What are the differences between the two policies?

For one, by fixing money supply, it will definitely encourage speculation as interest rates are allowed to swing freely. Bond prices, instead of remaining relatively stable as will be the case if the government chose to fix interest rate, will fluctuate wildly in accordance with the changes in interest rates. Bonds will gain greater prominence as a speculation instrument.

But the interesting questions are 1)Which policy will encourage the economy to grow faster, 2)Which policy will help to moderate booms or busts in the economy and 3)What are the effects of each policy during a boom and during a bust?