B.The aggregate demand curve shifts to the left.C.The aggregate demand curve shifts to the right.D. The slope of the aggregate demand curve decreases.

b) Would a decrease in net exports affect the monetary policy curve?

Problem 5Suppose that a new Fed chair is appointed, and his or her approach to monetary policy can be summarized by the following statement: "I care only about increasing employment; inflation has been at very low levels for quite some time; my priority is to ease monetary policy to promote employment."a) How would you expect the monetary policy curve to be affected, if at all?5b) What would be the effect on the aggregate demand curve?Problem 6Assume that the demand for real money balances is given by Md/ P = Y / 4 - 150 iSuppose that Y=8,000 billion, so that Md/ P = 11250 / 5 - 150 i (in billions of $).Calculate the demand for real money balances if the interest rate is 6%, 4%, and 2%, respectively.a) If the interest rate is 6%, the demand for real money balances is $1350 billion.b) If the interest rate is 4%, the demand for real money balances is $1650 billion.c) If the interest rate is 2%, the demand for real money balances is $1950 billion.Hint:Calculate Md/ P = 8,000 / 4 - 150 i = 2000 - 150i, substitute the interest rate for iex: 2000-150*6=1100Problem 7Suppose the economy experiences an increasean increase in aggregate output. How would this event affect the demand curve for real money balances?7A. The MD curve shifts to the right.7B. The slope of the MD curve increases.7C. The MD curve shifts to the left.7D. The MD curve does not shift.7e.) Draw the original and the new demand curve on the graph to the right.1.) Using the line drawing tool, draw the old MD curve. Label it as 'MD1'.2.) Using the line drawing tool, draw the new MD curve. Label it as 'MD2'.Carefully follow the instructions above, and only draw the required objects.

Problem 8Assuming the demand for real money balances is given by StartFraction Upper M Superscript d Over Upper P EndFraction equals StartFraction Upper Y Over 5 EndFraction minus 100 iMd/P = Y/5−100i.a) Find the equilibrium interest rate if the money supply is $1,750 billion and output = $10,250 billion.