Question
For each prompt below, carefully and thoroughly follow the directions. For the graphs, be certain to accurately label all axes, curves, and equilibria points. Use
For each prompt below, carefully and thoroughly follow the directions. For the graphs, be certain to accurately label all axes, curves, and equilibria points. Use arrows to indicate the direction of any shifts.
Assume that an increasingly digital society decreases their market transactions as they spend more time on non-market online activities.
(a) Draw a fully labeled money market, showing the impact of the change on the equilibrium nominal interest rate.
(b) On a new graph, illustrate the change in the money supply that would be required to restore the original equilibrium interest rate.
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