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2-) (Nice Question !! 56 points) Suppose that the economy has the money demand and supply equations as follows: DemandRSupplyR=2Qm+7=Qm+1 (a) Find the equilibrium level
2-) (Nice Question !! 56 points) Suppose that the economy has the money demand and supply equations as follows: DemandRSupplyR=2Qm+7=Qm+1 (a) Find the equilibrium level of R and Qm. (b) If the government wishes to sell two years bond which has 3200 TL face value by using the interest rate obtained in part (a), calculate the price of this bond P. (c) Central bank sets interest rate lower R=2, then find quantity of money supply and demand. If the central bank wants to fix interest rate at R=2, what will be the quantity of money Qm ? (d) Suppose that money demand increases due to higher inflation and becomes R=2Qm+ 10. However, central bank wishes to make stable at R=2 again, to do this, what will be the quantity of money Qm
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