Question: Using the liquidity preference framework, explain supply and demand in the money market. Explain the basic facts about the term structure of interest rates and

  1. Using the liquidity preference framework, explain supply and demand in the money market.
  2. Explain the basic facts about the "term structure of interest rates" and how these facts may or may not be explained by the three theories discussed in class.
  3. Using the loanable funds model, describe the relationship between bond prices and the interest rate.

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