2. Equilibrium and disequilibrium in the money market The following diagram represents the money market in the United States, which is currently in equilibrium. 6.0 Money supply 5.5 Money demand 50 Money supply INTEREST RATE (Percent) 4.0 1.0 Money demand 2.5 2.0 0.6 07 108 0.9 1.0 1.1 12 1.3 QUANTITY OF MONEY (Trillions of dollars) Suppose the Federal Reserve announces that it is raising its target interest rate by 75 basis points, or 0.75%. It would achieve this by the Shift either the money supply curve or the money demand curve, or both, to Illustrate on the graph the effects of this policy.Suppose the Federal Reserve announces that it is raising its target inter the increasing money supply curve or the money demand curve, or bot decreasing The canilethe money supply Shift either the money he money demand money demand The sequence of events that results in a new equilibrium inShift either the money supply curve or the money demand curve, or both, to Mustrate of decreases the effects of this policy. Increases The sequence of events that results in a new equilibrium interest rate, after the Fed mal be you selected, may be described as follows: Because there is . money in the financial system, the quantity of money demanded ,which means that bond issuers sell the bonds. This process continues until the new equilibrium interest rate is achieved.Shift either the m more apply curve or the money demand curve, or both, to illustrate on the grap less The sequence of hat results in a new equilibrium interest rate, after the Fed makes the cha Because there is money in the financial system, the quantity of money demanded sell the bonds. This process continuesShift alther the money supply curve or the money demand curve, or both, to Mustrate on the graph the effects of this policy. can issue bonds at lower Interest rates and still brium interest rate, after the Fed makes the change you selected, may be described as follows: must raise the Interest they pay to m, the quantity of money demanded which means that bond Issuers sell the bonds. This process continues until the new equilibrium interest rate is achieved