The demand for money in a country is given by Md= 10,000-10,000r +Y. Where Md is money demand in dollars,r is the interest rate (a 10 percent interest rate means r=0.1), and Y is natinal income. Assume Y is initially 5,000.
Graph the amount of money demanded ( on the horizontal axis) against the interest rate ( on the vertical axis) . suppose the money supply (Ms)is set by the central bank at $10,000. on the same graph, add the money supply curbe. what is the equilibrium rate of interest?