#45 OPTIONA PLEASE ANSWER OPTION A

Question 45 (5 points) Option A The demand for money is given by Md = $Y (0.3-1), where $Y = 120 and the supply of money is $30. a. What is the equilibrium interest rate?' b. If the central bank wants to decrease i by 2%, at what level should it set the supply of money? Of. Option 8 Suppose the interest parity condition holds and that the domestic interest rate is greater than the foreign interest rate. What does this imply about the current versus the future expected exchange rate? Explain what is the uncovered interest rate parity