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Money Market Graph a. Draw the money market graph showing the demand and supply for money. Explain why the demand for money is downward sloping.
Money Market Graph a. Draw the money market graph showing the demand and supply for money. Explain why the demand for money is downward sloping. Explain the relationship between the interest rate and investment and how an increase in the money supply will affect aggregate demand ( _/5) h. Draw the following four graphs with an economy experiencing an inationary gap: money market, investment demand, aggregate demand and supply (with the LRAS), and the Phillips curve. Show what happens in the short-run on all three graphs when the central bank decreases the money supply. ( _/5)
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