Please answer everything in the photos including both of the graphs. 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 decreases from 90 to 75.Shift the appropriate curve on the graph to show the impact of a decrease in the overall price level on the market for money.(?)INTEREST RATE (Percent)181512a630+010Money SupplyMoney Demand+402030MONEY (Billions of dollars)5060OMoney DemandDMoney SupplyFollowing the price level decrease, the quantity of money demanded at the initial interest rate of 9% will besupplied by the Fed at this interest rate. As a result, individuals will attempt tobonds and other interest-bearing assets, and bond issuers will realize that theyrestored in the money market at an interest rate of%than the quantity of moneytheir money holdings. In order to do so, they willinterest rates until equilibrium is The following graph plots the aggregate demand curve for this economy.Show the impact of the decrease in the price level by moving the point along the curve or shifting the curve.PRICE LEVEL18015012086030001820IIAggregate Demand406080OUTPUT (Billions of dollars)100120The change in the interest rate found in the previous task will lead to ain the quantity of output demanded in the economy.OAggregate Demandin residential and business spending, which will cause

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Answered: The change in the interest rate found…

The change in the interest rate found in the previous task will lead to a in the quantity of output demanded in the economy. in residential and business spending, which will cause

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Chapter1: Making Economics Decisions

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Question

Please answer everything in the photos including both of the graphs.

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 decreases from 90 to 75.
Shift the appropriate curve on the graph to show the impact of a decrease in the overall price level on the market for money.
(?)
INTEREST RATE (Percent)
18
15
12
a
6
3
0
+
0
10
Money Supply
Money Demand
+
40
20
30
MONEY (Billions of dollars)
50
60
O
Money Demand
D
Money Supply
Following the price level decrease, the quantity of money demanded at the initial interest rate of 9% will be
supplied by the Fed at this interest rate. As a result, individuals will attempt to
bonds and other interest-bearing assets, and bond issuers will realize that they
restored in the money market at an interest rate of
%
than the quantity of money
their money holdings. In order to do so, they will
interest rates until equilibrium is

The following graph plots the aggregate demand curve for this economy.
Show the impact of the decrease in the price level by moving the point along the curve or shifting the curve.
PRICE LEVEL
180
150
120
8
60
30
0
0
18
20
I
I
Aggregate Demand
40
60
80
OUTPUT (Billions of dollars)
100
120
The change in the interest rate found in the previous task will lead to a
in the quantity of output demanded in the economy.
O
Aggregate Demand
in residential and business spending, which will cause

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