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Q3 Money market and macroeconomy is initially at equilibrium and the central bank decides to decrease the money supply. a)Using appropriate diagrams to explain what

Q3 Money market and macroeconomy is initially at equilibrium and the central bank decides to decrease the money supply.

a)Using appropriate diagrams to explain what will happen to the interest rate, aggregate P level and Real GDP in the short run.

b)What will happen to the interest rate, aggregate P level and Real GDP in the long run?

c)Based on your analysis contraction of money supply in the long run only causes____________________________________?

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