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Q2 Recall the specification of the demand for money: M - SYL(i). Graph an initial money demand curve and show a situation in which money

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Q2 Recall the specification of the demand for money: M" - SYL(i). Graph an initial money demand curve and show a situation in which money demand becomes more responsive to the interest rate. (Hint: Consider a new demand function Mo - SY L'(1) . A shift of the curve does not represent the required situation) Q3 Suppose that the initial equilibrium interest rate is 3%. What is the equilibrium price of a $100 bond

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