1. Consider an economy that consists of one commercial bank and many individuals. The balance sheet of the bank is as follows: Loans $1600 Deposits
1. Consider an economy that consists of one commercial bank and many individuals. The balance sheet of the bank is as follows: Loans $1600 Deposits $2000 ' Reeve Rev _ Also, the individuals in the economy hold some cash, whose amount is $500 in total. What is the total money supply of the economy? Please carefully explain your answers. (4 marks)
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