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Suppose that money demand is given by MD Y(0

Economics

Suppose that money demand is given by MD Y(0.25 – i) where Y is 100. (a) If the Central Bank sets an interest rate target of 10%, what is the money supply the Central Bank must create? (b) If the Central Bank wants to decrease i from 10 to 5%, what is the new level of the money supply the Central Bank must set?

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