Macro Economics

If the money supply is: The interest rate is:

• $100 billion10%

120 billion 8%

140 billion 6%

160 billion 4%

120 billion 2%

If the interest rate is: Investment spending is:

10%$10 billion

8%20 billion

6%30 billion

4%40 billion

2%50 billion

Assume that equilibrium GDP is $400 billion, potential GDP is $500 billion, the marginal propensity to consume is 9/10, the interest rate is 8%, investment spending is $20 billion, the money supply is $120 billion, and the reserve requirement is 1/10. By how much and in what direction should the Fed change the monetary base?

Explain it with formula.