Effect on the money demand curve

4.3 Draw a graph of the money market. Show the effect on the money demand curve, the money supply curve, and the equilibrium short-term nominal interest rate of each of the following:
1. The Fed decreases the money supply.
2. A recession causes real GDP to fall.
3. The price level increases.
4. The Fed increases the money supply at the same time that the price level falls.

 

 

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