2.1 Does the money demand curve have a positive slope or a negative slope? Why does it have this slope? Explain why an increase in the variable on the vertical axis of the money demand curve causes either an increase or a decrease in the variable on the horizontal axis of the money demand curve. 2-2 Give an example of a monetary policy target. Explain why the Fed uses policy targets. 2.3 Use the money demand and money supply model to show graphically and explain the effect on interest rates of the Federal Reserve's open market purchase of Treasury securities. 2-4 Use the money demand and money supply model to show graphically and briey explain the effect on the interest rate if real GDP increases