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Instructions: Argue on the following premises: If the income of the economy increases and the Central Bank does not want to increase the money supply,

Instructions:

Argue on the following premises:

If the income of the economy increases and the Central Bank does not want to increase the money supply, they must lower interest rates. Plot.

If the money supply increases, you will have to raise the interest rate to balance the money market. Plot.

If the money supply were increasing with the interest rate, what would the graph of this curve look like?

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