Using the data in the table below, answer the following questions. (Hint: draw a graph when possible) Money Demand Interest Rate% (billions of dollars) 16 160 15 180 14 200 13 220 12 260 11 320 10 380 9 460 8 560 Assume that the money supply is equal to 220 (do not use % signs in your answers) Part 1: What is the equilibrium rate of interest? Number Part 2: Assume that the Bank of Canada buys bonds and increases the money supply to 380 What is the equilibrium rate of interest? Number Part 3: A fall in income causes the demand for money to Click for List by 60 billion. If the money supply is 140, what is the equilibrium rate of interest? Number Part 4: Assuming the change in part 3, if money supply is 400, what is the equilibrium rate of interest? Number Part 5: An increase in income causes the transaction demand for money to Click for List by 40 billion at each interest rate. (Assume the change in part 3 did not occur. Given a money supply of 220, what is the equilibrium rate of interest? Number Part 6: Given the change in part 5, if money supply is 360, what is the equilibrium rate of interest? Number

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