Question: (Appendix 9.B) Recall from Chapter 7 that an increase in im, the nominal interest rate on money, increases the demand for money. To capture that

(Appendix 9.B) Recall from Chapter 7 that an increase in im, the nominal interest rate on money, increases the demand for money. To capture that effect, let us replace Eq. (9.B.17) with
Md/p- = t0 + lyY- lr(r + ne - im).

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