Assuming Everything Else Held Constant,suppose There Is an Increase in the Demand

question 62

Essay

Assuming everything else held constant,suppose there is an increase in the demand for money.
(A)Use a supply and demand diagram to show what will happen to the equilibrium interest rate if the supply of money is fixed.
(B)If there was an increase in money demand and the interest rate was fixed,what would happen to the money supply? Explain how the change in money supply would come about.

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