Answer
Please see the graphs.
Work Step by Step
a) The increased money supply shifts the money supply to the right. In turn, the interest rate decreases, and the quantity of money increases. Please see graph A.
b) The increased aggregate demand will shift the aggregate demand curve up, and the price level increases to $P_{2}$. The level of output also increases, to $Y_{2}$. Please see graph B.
c) When the economy goes to the long-run equilibrium, the price level in graph B increases to $P_{3}$ while the output reverts to $Y_{1}$.
d) The increased price level will increase the demand for money. In turn, this increased demand for money will increase the interest rate in the economy.
e) Yes, this analysis is consistent. The output temporarily increases in the short-run (but reverts back to its normal level in the long-run). Thus, there are no changes to the money supply based on output.
