Aggregate Demand I-Work It Out: Question 2 Suppose that the money demand function is M = 600-75r where r is the interest rate in percent. The money supply M is $1500, and the price level P is fixed at 5. Round answers to one place after the decimal when necessary. c. What happens to the equilibrium interest rate, r, if the supply of money is raised from $1500 to $1725? r= d. If the central bank wants the interest rate to be 6.0 percent, what money supply should it set? Money supply = $
