Suppose the Reserve-Deposit Ratio Is

question 66

Essay

Suppose the reserve-deposit ratio is
res = 0.5 - 2 i,
where i is the nominal interest rate.The currency-deposit ratio is 0.2 and the monetary base equals 100.The real quantity of money demanded is given by the money demand function
L(Y,i)= 0.5Y - 10 i,
where Y is real output.Currently the real interest rate is 5% and the economy expects an inflation rate of 5%.Assume the price level P is equal to 1.
(a)Calculate the money multiplier.
(b)Calculate the reserve-deposit ratio.
(c)Calculate the money supply.
(d)Calculate the value of output Y that clears the asset market.

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Definitions:

Twin Study

A study in which groups of monozygotic (identical) and dizygotic (fraternal) twins of the same sex are compared to each other and to other family members for similarity on a given trait.

Monozygotic Twins

Twins that are genetically identical because they were formed from a single fertilized egg that split into two, sharing 100% of their genes.

Dizygotic Twins

Also known as fraternal twins, these are siblings born at the same time who have developed from two different eggs fertilized by two different sperm, sharing about 50% of their DNA.

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