ps S Suppose the money market for some hypothetical economy is given by the following graph, which plots the money demand and money supply curves. Assume the central bank in this economy (the Fed) fixes the quantity of money supplied. Suppose the price level increases from 150 to 175. Shift the appropriate curve on the graph to show the impact of an increase in the overall price level on the market for money. INTEREST RATE (Percent) 12 Money Supply 10 0 0 5 10 15 Money Demand 20 25 30 MONEY (Billions of dollars) O Money Demand Money Supply

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