C: Money demand and interest rates For questions 13-17, assume that the real money demand function is L (Y, T + 7T6), where Y is real output. 1' is the real interest rate, and 71' e is the expected rate of inflation. C1: Money demand elasticities Questions 13 and 14 use the following information: during one year income rises by 3% and the real interest rate rises from 5% to 6%, while real money demand rises by 1%; and in another year, income falls by 3.5%, the real interest rate falls from 4% to 3%, while real money demand falls by 1%. For questions 15-17 suppose that real output is initially Y = 250. The real interest rate is determined in the goods market at an initial rate of 'r = 0. 05 per year. Question 15 By what percentage does the real demand for money differ from its initial value if output increases to Y = 260 (and 1' remains at 0.05)? The real demand for money will be 4% lower. The real demand for money will be 4% higher. The real demand for money will be 2% higher. The real demand for money will be 2% lower