Is this higher or lower than the equilibrium interest rate

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Reference no: EM13817340

1. Describe where the liquidity-demand/money supply equilibrium appears on the graph.

2. Suppose in this period the interest rate is i0. Is this higher or lower than the equilibrium interest rate?

3. Will next period’s interest rate be higher or lower than this period’s?

4. How will this adjustment occur? (Assume that the parameters remain constant; the curves do not shift.)

Reference no: EM13817340

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