hi please help me with this macroecon prac qn thank you

11. In November 2016, the Reserve Bank of India announced that all 500 and 1,000 rupee bills would no longer be legally valid. By removing this currency from circu- lation, there was an immediate fall in the money supply M3. To begin with, assume that prices and wages are xed in terms of money, and that output and interest rates are determined by the ISLM model (suppose no future price changes are expected for now). (a) [2 marks] Analyse the demonetization policy using the ISrLM model and pre- dict its effects on interest rates and output. Now consider a model of aggregate supply where prices and wages are fully flex ible even in the short run. (b) [4 marks] Explain why the equilibrium levels of employment and output should not be affected by the demonetization once the policy has become known to everyone and no money illusion remains. (c) [2 marks] In light of your answer to part (b), should the real interest rate be affected by the demonetization if prices and wages are fully exible and the policy quickly becomes known by everyone in the economy? Explain. Assume that the demand for money is represented bythe equation Md/P = L(Y,i), where P is the price level and L(Y, r) is an increasing function of real income Y and a decreasing function of the nominal interest rate r'. (d) [4 marks] Briey outline why the Baumol-Tobin model provides a theoretical foundation for a money demand equation with the properties above