Suppose the real money demand function is Md/P = 2400 + 0.2Y - 10,000 (r + ?e).Assume M = 5000, ?e = .03, and Y = 5000. If the price level were to decrease from 2.5 to 2.0, then the real interest rate would decrease by how many percentage points (assuming Md, ?e, and Y are unchanged)?
A. 14
B. 5
C. 9
D. 4
Answer: B
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