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Please answer this with explaination. 1. What happens to M1 and M2 clue to each of the following changes? You take $500 out of your

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1. What happens to M1 and M2 clue to each of the following changes? You take $500 out of your checking account and put it into a passbook sayings account. a. b. You take $1000 out of your checking account and buy traveler's checks. c You take $1500 out of your moneymaket mutual fund and deposit into your checking account. cl You cash in $2000 in sayings bonds and inyest the money in a certificate of deposit. 2. Money demand in an economy in which no interest is paid on money is Ma P = 500+ 0.2Y - 1000i a) Suppose that P= 100, Y= 1000 and / = 0.10. Find real money demand, nominal money demand and velocity. b) The price level doubles from P = 100 to P = 200. Find real money demand, nominal money demand and velocity. 3. Suppose the money demand function is Ma P -= 1000 + 0.2Y - 1000(r + m) Calculate velocity if Y = 2000, / = 0.06, and 7 = 0.04 Q50 If the money supply (MF) is 2600, what is the price level? Now suppose the real interest rate rises to 0.11, but Y and / are unchanged. What happens to velocity and the price level? So if the nominal interest rate were to rise from 0.10 to 0.15 over the course of a year, with Yremaining at 2000, what would the inflation rate be

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