Suppose that the money demand equation is (M/P)d = 600 − 75r   where r is the real interest rate in percent. The money supply M is $900, and the price level P is fixed at 3.   a. Solve for the equilibrium real interest rate. Mark the equilibrium interest rate and the real money supply on the money market diagram.   b. Solve for the equilibrium real interest rate if M rises from $900 to $1050. Illustrate the money supply increase on the diagram in part a. Mark the new equilibrium interest rate and the new real money supply on your diagram.

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