Asset Market [5marks]

Explain what happens to real money supply and real money demand in each of the following scenarios in theshort-run. Illustrate your answer using a diagram with real interest rate on the vertical axis and real money on the horizontal axis.Label the axes and curves clearly.

a) Nominalmoney supply increases [1 mark]

b) Many more stores accept digital payment technologies like credit cards[1.5 marks]

c) Stock market crashes[1.5 marks]

d) Price Levelrisesand nominal money supply is fixed[1 mark]