Suppose real output is 12,500, and the demand for real money balances is 
= 
- 125i. If the equilibrium interest rate is 7 percent, calculate the money supply . If the central bank sets the interest rate at 8 percent, what is the new money supply?
Definitions:
Economy
The system of production, distribution, and consumption of goods and services within a geographical region.
Monopoly Position
A market condition where a single entity dominates the supply of a particular good or service, limiting competition.
De Beers Diamond
De Beers Diamond refers to the diamonds mined, marketed, and sold by De Beers, a company known for its historical dominance in the diamond industry.
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