Question: EXPLANATION AND SOLUTION PLEASE. 1.Show the solution and solve for the equilibrium interest rate if the money supply is P175,000 while the money demand is

EXPLANATION AND SOLUTION PLEASE.

1.Show the solution and solve for the equilibrium interest rate if the money supply is P175,000 while the money demand is Y(0.40 - i) and yearly income is P500,000. What happens to the equilibrium level of interest rate if the money supply is doubled by the central bank? Show your computations as supporting evidences. (20 pts)

2.Explain how it was possible to have a yearly income of P500,000 which is higher compared to the money supply of P175,000 only. (20 pts)

3.Comment and explain the possibility of a negative interest rate and the possible meaning and implication of such an occurrence. (20 pts)

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