Draw a graph showing equilibrium in the money market (assuming that the money supply is insensitive to the interest rate). Explain how equilibrium will be achieved in the market if at the starting point current interest rate will be higher than equilibrium interest rate. Show what will change in the market if output (production) falls. What could the central bank do to maintain the initial state of the money market

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04-06-2024
Mathematics

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Draw a graph showing equilibrium in the money market (assuming that the money supply is insensitive to the interest rate). Explain how equilibrium will be achieved in the market if at the starting point current interest rate will be higher than equilibrium interest rate. Show what will change in the market if output (production) falls. What could the central bank do to maintain the initial state of the money market

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