Suppose the following table represents the money demand for various price levels: Md 1/P 7000 3 5000 5 2000 8 (a) Calculate the linear money demand function

(Md = a b* 1/P) function. (b) Assume that the supply of money is Ms = $6000. Calculate the equilibrium price level in the economy. Draw a graph representing the equilibrium in the money market with the value of money in the y-axis.