Question: a) Using the money demand function, explain the two major components of the demand for money. Using the money demand and money supply functions, demonstrate

a) Using the money demand function, explain the two major components of the demand for money. Using the money demand and money supply functions, demonstrate the equilibrium in the money market when income increases. (4 marks) b) What relationship does an LM curve represent? Derive an LM curve from money market equilibriums. (3 marks) c) Is the LM curve a realistic representation of money market equilibriums in Australia? Distinguish the assumptions of an LM function and an MP function

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