ii. Suppose the total demand for money is described by the following equation: MD=30-2i
The total supply of money supply is also described by the following equations: MS = 3 +7i
Where: MD = Demand for Money
MS = Supply of Money
i interest rate
a) What is the equilibrium level of interest rate and quantity of money?
b) If government fixes the interest rate above the equilibrium rate in a), what will happen in the short term market for money.
c) What if the government fixes interest rate below the equilibrium in a), what will happen in the short term market for money.