Draw a graph of a money demand curve and a money supply curve. On the graph, indicate the equilibrium interest?
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Draw a graph of a money demand curve and a money supply curve. On the graph, indicate the equilibrium interest rate. Also indicate the new equilibrium interest rate if the Fed increases the money supply.
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Answer:
Draw Your Demand and supply curve.(should be a big X). Supply is line that goes increase from left to right. Demand is the line that increases from right to left. The point at which these 2 lines intersect is your equilibrium interest rate. Your y axis = interest rate your x axis = supply. If the fed increases teh money supply then shift the supply curve to the right. Where the new supply curve and the demand curve meet is now the new equilibrium interest rate.
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