1.Using the Aggregate Demand-Aggregate Supply model diagrams, describe the effect of the following developments on money supply, demand for money and interest rates. (Use a different diagram for each event)

a)COVID-19 pandemic causes pessimism about the economy which eventually increases the amount of money people hold.(3 Marks)

b)The Central Bank of Kenya increases commercial banks' reserve requirements.

(3 Marks)

c)Households decide to spend more money during the COVID-19 lockdown.(3 Marks)