Question 7[9 Marks)Any change in the demand for money or supply of money will cause a temporary moneymarket disequilibrium. The graph below takes a look at how the market for moneytransitions from a state of disequilibrium back to a state of equilibrium assuming adecrease in the demand for money.Interest rate (percent)Required:Panel (a)D₂DMQuantity of money per periodPrice of bondsPanel (b)D₁D₂Q₁ Q₂Quantity of bonds per periodUsing the graph above, fully discuss how a market for money and a market for bondsgo back to a state of equilibrium following a temporary disequilibrium.

When both the demand and the supply for money or bonds are balanced, the market is said to be in…

Answered: ing the graph above, fully discuss how…

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ing the graph above, fully discuss how a go back to a state of equilibrium following a

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