29

res=0.52.3r where res is the reserve-deposit ratio and r is the real interest rate The currency-deposit ratio is 0.35 , the price level is foced at 0.8 , and the monetary base is 60 . The real quantity of mocey demanded is L(Y,1)=0.6Y8i Where Yis real output and i is the nominal interest rate. Assume that the expected inflation rate is zero so that the nominal interest rate and the real interest rate are equal. a. If ri=0.12, what are the resorve-deposit ratio, money multiplier, and money supply? For what real output, Y, does a real interest rate of 0 12 clear the asset market? reserve-depositrabo=(roundtotwodecimalplaces)maneymaitiplier=(roundtotwodecimalplaces)moneysupply=(roundtothenoarestwholenumber) Y=(roundtothenearestwhovenumber) b. Now assume that i " i =0.06. What are the reserve-deposit ratd. money mukiplier, and money supply? For what real output. Y, does a real interest rate of 0.06 clear the asset market? resene-depositratioin(roundtotwodecimalplaces)moneymutiplier=(roundtotwodecimalplaces)moneycupply=(roundtothenearestwholenumber)Y=(roundtothenearestwholenumber) c. Suppose that the reserve-deposit ratio is fixed at the value you found when r=r=0.12 and iscit aflected by interest rates. If r=y=0. 06. for what outpot. Y; does the asset maaket cleat in this case? Y=(roundtothenearestwholenimber)