Use the following to answer questions:
Figure: Short-Run Determination of the Interest Rate 
-(Figure: Short-Run Determination of the Interest Rate) Look at the figure Short-Run Determination of the Interest Rate. If the money supply is at MS2 and the Fed conducts contractionary monetary policy, in the short run the interest rate increases to r1. In the long run: the demand for money will _____, and the interest rate will_____.
Definitions:
Ivan Pavlov
A Russian physiologist known for his work in classical conditioning, demonstrating how stimuli can trigger reflexes and behaviors in animals.
Averts Her Gaze
The act of someone deliberately looking away to avoid eye contact, which can be interpreted in various social or psychological contexts.
Embarrassment
The feeling that people experience when interaction is disrupted because the identity they have claimed in an encounter is discredited.
Homogeneous Group
A group of individuals who share similar characteristics, such as ethnicity, cultural background, or interests, making the group relatively uniform.
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