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Business, 28.12.2019 05:31 girlhooper4life11

Suppose that the money demand function is (m/p)d=1000-200r where r is the interest rate in percent. the money supply m is 1200 and the price level p is 2.

a. graph the supply and demand for real money balances.
b. what is the equilibrium interest rate?
c. assume the price level is fixe
d. what happens to the equilibrium interest rate if the supply of money is raised from 1200 to 1600?
d. if the fed wishes to raise the interest rate to 5 percent, what money supply should it set?

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