Use the below graphs to answer the following questions assuming the nominal GDP in the economy is given.

(a) Look at graph A and suppose the supply of money increases from 100 to 200. What will be the equilibrium rate of interest?

(b) Look at graph B which shows an investment-demand curve for this economy. Given the answer to part (a) above, how much will investors plan to spend on capital goods?

(c) What will happen to aggregate demand?

(d) Now trace what will happen in parts (a)?(c) if the money supply increases to $300.

Interest rate (%) s 3 I Ms, Ms, Ms Interest rate wo Price level De 100 200 300 Amount of money demanded and supplied ($) (A) Real GDP 70 120 170 Investment ($) (8) AS AD3 Q Q AD -AD Investment demand