1.1. Assume the central bank increases the quantity of money by 25%, even though the economy is initially in both short-run and long-run macroeconomic equilibrium. Describe the effects, in the short run and in the long run (giving numbers where possible), on the following:

a. Aggregate output

b. Aggregate price level

c. Real value of the money supply (purchasing power for goods and services)

d. Interest rate