y targets of the three groups mentioned? mix of the two ply. monetarists target interest rates, and the Fed targets a Keynesie ifnix of the two. get interest rates, monetarists target steady money growth, and the Fed mix of the two. The Fed targets the money supply. monetarists target interest rates, and Keynesians target a (d) The Fed targets interest rates, monetarists target steady money growth, and Keynesians insert target a mix of the two. Problems and Applications Exercise 1 This exercise focuses on the relationship between the money supply, interest rates, and aggregate demand. Use Figure 15.1 to answer questions 1-7. Figure 15.1 Money Money Money supply; supplyz supply3 pause ctri INTEREST RATE INTEREST RATE w Money Investment demand demand 30 40 65 . 100 135 10 20 QUANTITY OF MONEY RATE OF INVESTMENT (billons of dollars) (billons of dollars) 1. Assume the Federal Reserve sets the quantity of money at Money supply 2. The equilibrium interest rate is percent and the equilibrium quantity of money is. 2 . Based on Money supply 2, the rate of investment is equal to 3. Suppose the Federal Reserve increases the money supply by $35 billion. The new equilibrium interest rate is percent. As a result of the (increase, decrease) in the interest rate, the rate of investment will (increase, decrease) 4. to