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For the purposes of the next questions, the First MD Curve is as before: MD, = 20,000 - 1,000i And the Second MD curve a
For the purposes of the next questions, the First MD Curve is as before: MD, = 20,000 - 1,000i And the Second MD curve a new MD curve: MD2 = 20,000 - 400i 9. If Money Demand is equal to MD2, then what must be the Money Supply (MS) for the interest rate to be equal to 12%? [1 point] 10. With a Money Supply equal to your answer from Q9, and with MD2, how much would the Central Bank need to change the money supply now to close this output gap. [2 points] N 11. Which of the two curves would Keynesians believe is more likely to be the case? Which is more in line with the monetarist point of view? Explain your answer. [2 points]
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