(Solved): In the following table, fill in the column labeled Vatue of Money: Now consider the relationship be ...

In the following table, fill in the column labeled Vatue of Money: Now consider the relationship between the quantiky of money that people demand and the price level. The higher the price level, the money required to complete transactions; and the moner people will want to hold in the form of currency or demand deposts: Assume that the Federal Resarve initially foxes the quantity of money supplied at $\$2.5$ balion. Use the orange line (square symbol) to plot the invial money supply ( $M{S}_1)$ set by the Fed. Then, referring to the previous table, use the bitue connected points (olrcle symbol) to graph the money demand curve. According to your graph, the equilibrium value of money is , therefore the equilibrum price level is Now, suppose that the Fed increases the money supply from the initisl level of $\$2.5$ billion to $\$4$ billion. In order to increase the meney supply, the Fed can use open market operations to the public Use the purple Nne (diamend symbod) to plot the new moner suppor $(M{S}_3$ ). Immediately after the Fed changes the money supply from its initial eocilibrium level, the quantity of moner suppled is than the quantity of money demanded at the initial equilibrium. This exponsion in the money supply will people's demand for goods and services. In the long run, since the economy's abdity to produce goods and services has hot changed, that prices of goods ond services wir and the value of money will