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In the economy of Mungo, there is a third person called Ike.Ike has a red income of 82 and a blue income of 25.Recall that blue prices are 1 bcu (blue currency unit) per unit of ambrosia and 1 bcu per unit of bubble gum.Red prices are 2 rcus (red currency units) per unit of ambrosia and 6 rcus per unit of bubble gum.You have to pay twice for what you buy, once in red currency, once in blue currency.If Ike spends all of his blue income but not all of his red income he must consume
Reserves
Assets held by a financial institution or an individual as a buffer for potential future liabilities or emergencies.
Leverage
The use of borrowed money to supplement existing funds for purposes of investment.
Bank Investments
Financial assets purchased or held by banks, including bonds, stocks, real estate, and other securities, with the aim of generating income or capital appreciation.
Leverage Ratio
The ratio of assets to bank capital.
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