Question: Use the graph below to answer the following questions: D, is the transactions demand for money, Dm is the total demand for money, and

Use the graph below to answer the following questions: D, is the transactions demand for money, Dm is the total demand for money, and

Use the graph below to answer the following questions: D, is the transactions demand for money, Dm is the total demand for money, and Sm is the supply of money. 1. What is the transactions demand for money in this market? Number Number 2. What is the asset demand for money if the interest rate is 2 %? 3. If the money market is in equilibrium at 4 %, what change in money supply must occur for the equilibrium rate to change to 2% (include a negative if a decrease in money supply) Number 4. If the money market is in equilibrium at 6% and the money supply has increased to Sm3, by how much has total demand for money changed? Number Rate of interest 6 4 N 0 I Dt Sm1 Sm2 105 155 205 Quantity of Money Sm3 255 Dm

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