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Suppose that money demand is given by Md=$Y(0.440.8i) where $Y is $140. a. If the Federal Reserve sets an interest rate target of 6%, the
Suppose that money demand is given by
Md=$Y(0.440.8i)
where $Yis $140.
a. If the Federal Reserve sets an interest rate target of 6%, the money supply it must create is $_________________(Round your response to two decimal places.)
b. If the Federal Reserve wants to increase the interest rate i from 6 to 10%, the new level of the money supply it must set is_________________ (Round your response to two decimal places.)
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