7 The spreadsheet provides data on the demand for money in Minland. Columns A and B show the demand for money schedule when real GDP (Y0) is £10 billion. Columns A and C show the demand for money schedule when real GDP (Y1) is £20 billion. The quantity of money supplied is £3 billion.

What is the interest rate when real GDP is £10 billion?
Explain what happens in the money market in the short run if real GDP increases to £20 billion.

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A B C 1 2 3 7 (LL65432 456 T Yo Y 7 1.0 1.5 1.5 2.0 2.0 2.5 2.5 3.0 3.0 3.5 3.5 4.0 8 1 4.0 4.5