![Labor Goods and Assets. We can represent this graphically by graphing real interest rate versus output. Labor Goods and Assets. We can represent this graphically by graphing real interest rate versus output.](https://web.mnstate.edu/stutes/Econ304/RootNotes/Image152.gif)
Labor Goods and Assets. We can represent this graphically by graphing real interest rate versus output.
![The Federal Reserve (Fed) expands the money supply by 5 percent. a. Use the theory of liquidity preference to illustrate in a graph the impact of this policy on the interest rate. The Federal Reserve (Fed) expands the money supply by 5 percent. a. Use the theory of liquidity preference to illustrate in a graph the impact of this policy on the interest rate.](https://homework.study.com/cimages/multimages/16/ques_8.1_24979638906417610986.jpg)
The Federal Reserve (Fed) expands the money supply by 5 percent. a. Use the theory of liquidity preference to illustrate in a graph the impact of this policy on the interest rate.
![With the help of a diagram, explain the effect of an increase in money supply on interest rate. | Homework.Study.com With the help of a diagram, explain the effect of an increase in money supply on interest rate. | Homework.Study.com](https://homework.study.com/cimages/multimages/16/instant602171091295248314.png)
With the help of a diagram, explain the effect of an increase in money supply on interest rate. | Homework.Study.com
![Suppose the Fed increases the nominal money supply. Use the AD/AS model to discuss the impact on inflation and real GDP, in the short run and long run. | Homework.Study.com Suppose the Fed increases the nominal money supply. Use the AD/AS model to discuss the impact on inflation and real GDP, in the short run and long run. | Homework.Study.com](https://homework.study.com/cimages/multimages/16/nishant22235324545450957688398.jpg)