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    the equilibrium interest rate

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    Using a figure similar to Figure 14-11, explain how the money market and the loanable funds market react to a reduction in the supply in the short-run.

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    In the attached diagram, both the money market and the loanable funds market are initially in equilibrium at the same rate of interest, r1. A decrease in the money supply shifts the ...

    Solution Summary

    The equilibrium interest rate is assessed.