The Money Supply = 425 and Money Demand = 400 - 500r + .75Y where r = interest and Y = income. Equilibrium interest rate is found by setting MS = MD (see power point notes, Example Money). The current income (GDP) level is $3,600. The equation is: 425 = 400 - 500r + .75(3,600) a. What is the current interest rate? b. What will the interest rate be if income increases to $5,000? (hint: recalculate the equilibrium interest rate using $5,000 in place of the $3,600)