Suppose at time T, the money supply in Mexico increases by 50% unexpectedly. Nothing else changes (including expectations for the future). Please answer the following questions: c. (5 points) What happens to the Mexican interest rate at time T? Explain your answer. -> I= A MS- A GDP =.50-.02 =.48 IM= r+ 1 =.02+.48=.50 An increase to the money supply causes inflation to skyrocket, driving nominal rates up significantly