Question: Suppose there is an increase in the interest rate on checkable deposits. Explain how this will affect (a) the C/CD ratio, (b) the money multiplier,

Suppose there is an increase in the interest rate on checkable deposits. Explain how this will affect (a) the C/CD ratio, (b) the money multiplier, (c) the money supply, and (d) GDP. In explaining how it will affect GDP, explain and diagrammatically represent your answer - in the process being sure to explain the process of moving from one equilibrium to another in the Md-Ms model.

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