The tables below Show hypothetical schedules for money demand' money supply, aggregate demand, and aggregate supply in an economy whose natural unemployment rate is estimated to be 5.5 percent. 31:12:: Quantity Demanded (Dm ) Quantity Supplied (S m0) (3 Quantity Supplied (S 1111) (3 Rate (:5) (3 billions) billions) billions) Price Level (EDD) (2012 3 AD 2012 I) ll (2012=1|]|]) billions) ( l) ( $ 1 ions) (As) (2012 $ billions) - \"\" - \"___ \"___ a. On one graph draw the money demand and initial money supply curves, Dm and SmOl and on another graph draw the initial aggregate demand curve and the aggregate supply curve, ADO and AS. Plotonly the endpoints of the money supply and aggregate demand curves. and four points each for the money demand and aggregate supply curves. Money Market 12 Tools 10 Dm Smo 8 Smi Nominal Interest Rate (%) 6 4 2 0 20 40 60 80 100 120 Quantity of Money ($ billions)The Economy Tools 180 160 ADO AD1 140 120 AS 100 Price Level (2012 = 100) 80 60 40 20 0 100 200 300 400 500 600 700 800 900 Real GDP (2012 $ billions)b. What is the equilibrium interest rate in the money market? What are the equilibrium price level and real output in the economy? The initial equilibrium interest rate is 9%. The initial equilibrium price level and real output are and $ billion. c. Suppose the economy is facing an unemployment rate of 6 percent and a rising rate of inflation. Is this economy facing a recessionary or inflationary gap? Should its central bank use a contractionary or expansionary monetary policy? This economy is facing a (Click to select) v . Central bank should use |(Click to select) v | monetary policy. d. If the monetary policy applied in part c causes the money supply to change by $20 billion, show the effect on the money market by filling in the Quantity Supplied (Sm1) column in the first table and draw the new money supply curve, Sm1, on your graph. Plot only the endpoints of the new curve. What is the new equilibrium interest rate? percent e. If the change in the interest rate in part d causes a $170 billion change in real expenditures at every price level, show the effect on the economy by filling in the Real GDP (AD,) column in the second table and draw the new aggregate demand curve, AD1, on your graph. Plot only the endpoints of the new curve. What are the new equilibrium price level and real output in this economy? The new price level and real output are and $ billion. f. Is the change in equilibrium real output greater than or less than the shift in the AD curve? The change in equilibrium real output is (Click to select) | than the shift in the AD curve