1 I 9. Tools of monetary policy Suppose that the household nominal income in an economy is 5,000 billion and the demand for money is given by M = Y(0.08 0.41) a. If the money demand is equal to 100 billion what is the b. interest rate? What should the central bank do to interest rates if it wants to increase the money supply to 300 billion? If the central bank decides to expand money supply to 300 billion, should it change the interest rate or imple- ment open market operations