December 2018 23. The diagram shows the demand for money in an economy (where the horizontal...

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December 2018 23. The diagram shows the demand for money in an economy (where the horizontal axis is in billions of dollars and 90 80 vertical axis is an index of the purchasing power value of money) a) If the supply of money in this economy is $3 billion, sketch the supply of money curve. 70 60 50 3 points 40 30 b) Illustrate on your diagram a 50 percent increase in the money supply 20 MD 2 points 10 What is the new value of the index of the value of c) 1 2 3 4 567 8 9 Quantity of Money 2 points money? d) If there are no other changes in the economy, how much will be the ensuing increase in the price level? 3 points December 2014. Value of Money December 2018 23. The diagram shows the demand for money in an economy (where the horizontal axis is in billions of dollars and 90 80 vertical axis is an index of the purchasing power value of money) a) If the supply of money in this economy is $3 billion, sketch the supply of money curve. 70 60 50 3 points 40 30 b) Illustrate on your diagram a 50 percent increase in the money supply 20 MD 2 points 10 What is the new value of the index of the value of c) 1 2 3 4 567 8 9 Quantity of Money 2 points money? d) If there are no other changes in the economy, how much will be the ensuing increase in the price level? 3 points December 2014. Value of Money