Graph the supply and demand curves for real money balances

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Reference no: EM131210367

Graph the supply and demand curves for real money balances. Explain what happens to the interest rate in each of the following situations:

a. Credit cards become more widely used and accepted to make transactions.

b. The economy is growing faster than the Fed thinks is desirable; therefore, the Fed sells bonds to the public.

c. Many new near money substitutes are created.

d. The overall price level falls while the nominal money supply remains constant.

e. ATM machines become more accessible and more widely used

f. The secondary markets for negotiable CDs and junk bonds collapse. g. Infl ation is expected to pick up in the coming year.

Reference no: EM131210367

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