Explain how each of the following developments would affect the supply of money, the demand for money and the interest rate. Illustrate your answers with diagrams.

a. The central bank’s bond traders buy bonds in openmarket operations.

b. An increase in credit card availability reduces the cash people hold.

c. The central bank reduces banks’ reserve requirements.

d. Households decide to hold more money to use for holiday shopping.

e. A wave of optimism boosts business investment and expands aggregate demand.

f. An increase in oil prices shifts the short-run aggregate supply curve to the left.