Question: Consider an exogenous decrease in real money demand (e.g., a substantial increase in credit card usage) in a closed economy. Assume that prices are fixed

Consider an exogenous decrease in real money demand (e.g., a substantial increase in credit card usage) in a closed economy. Assume that prices are fixed in the short run.

(a) Will the interest rate increase in the short run?

(b) Will income increase in the short run?

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