Due to presence of HOMEWORKLIB POLICY, I am answering first question.
1.
Ans: c. fall.
Explanation:
Since quantity of money demanded is less than quantity of money supplied, we have following situation:
With current rate being higher than equilibrium rate, people will invest money and purchase more bonds due to which their return (interest) will fall. The excess demand of bonds will result in fall in interest rate in the market.
Equilibrium rate = i*
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