Question 3: (15 points) Consider the model of nancial markets with no checkable deposits i.e. all money is currency. Md = $Y L(i) and M8 = M Where L(z') = (0.275 i), and $Y = $100. a) (5 points) Assume that the Fed chooses the money supply, M = $20. What is the equi librium interest rate? b) (5 points) Now suppose that the Fed wants the equilibrium interest rate, 11 = 15%. What is the new level of money supply the Fed has to choose to achieve this interest rate? c) (5 points) Draw only one graph showing equilibrium in nancial markets for parts (a) and (b)