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Using a Graph of the Supply and Demand for Money

Question 37

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Using a graph of the supply and demand for money, show how an increase in the interest rate could lead to a long-term decrease in the equilibrium interest rate, even considering the income effect.
Using a graph of the supply and demand for money, show how an increase in the interest rate could lead to a long-term decrease in the equilibrium interest rate, even considering the income effect.

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An increase in the money supply lowers t...

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