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Suppose that the money demand function is (M/P)d = 100 - 10r where r is the interest rate in percent. The money supply M is 100 and the price level P is
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SOLVED: Interest rate, r Supply r1 r2 Demand, L M1/P1 M2/P2 M3/P3 Real Money Balances, M/p (Exhibit: Market for Real Money Balances) Based on the graph, if the interest rate is r1,
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SOLVED: Exhibit: Market for Real Money Balances interest rate, Supply Demand. M, IPi MIP MyIP, Real Money Balances. M/P Based on the graph, if the interest rate is ri, then people will
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