Assume that the equilibrium in the money market may be described as M/P = 0.5Y - 100r, and M/P equals 800.
a. Write the curve two ways, expressing as a function of and as a function of . (Hint: rite the curve only relating and , substitute out .)
b. What is the slope of the curve?
c. If is 1 percent, what is al ong the curve? If is 3 percent, what is al ong the curve? If is 5 percent, what is al ong the curve?
d. If increases, does the curve shift upward and to the left or downward and to the right?
e. If increases and is constant, does the curve shift upward and to the left or downward and to the right?
f. If increases and is constant, does the curve shift upward and to the left or downward and to the right?
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b. The slope of the
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