Q.1a)Use the following graphs to explainwhat is Dt, Da and Dm?

b) How the Money Supply (Sm) is changed by the Bank of Canada to rase and lower interest rates?

Q.1 a) Use the following graphs to explain what is Dt, Da and Dm? b) How the Money Supply (Sm) is changed by the Bank of Canada to rase and lower interest rates? Ans: Rate of interest, (percent) 7.5 2.5 D, Rate of interest, i 10 10 (percent) (percent) ISm 7.5 2.5 D. Rate of interest, i 2.5 D. 0 50 100 150 200 0 50 100 150 200 0 50 100 150 200 250 300 Amount of money demanded (billions of dollars) Amount of money demanded (billions of dollars) Amount of money demanded and supplied (billions of dollars) (a) Transactions demand for money, D, (b) Asset demand for money, Da (c) Total demand for money, Dm = D, + Day and supply