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Suppose that money demand can be expressed as a function of interest rates, income, and financial...

Suppose that money demand can be expressed as a function of interest rates, income, and financial innovation (e), where a positive value in term “e” implies an increase in the sophistication of the payments system and therefore reduces the demand for money. The function is expressed as Md = L (i, Y, e). Assuming equilibrium in the money market, does financial innovation raise the velocity of money? Show your work.

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