Banks in New Transylvania have a desired reserve ratio of 10 percent and no excess reserves. Fhe currency central bank increases bank reserves by $1,200. What is the initial increase in the monetary base? How much do the banks lend in the first round of the money creation process? How much of the amount initially lent does not return to the banks but is held as curren- drain ratio is 50 percent. Then the Set out the transactions that take place and calculare the amount of deposits created and the increase in the amount of currency held after the second round of the money creation process.

Banks in New Transylvania have a desired reserve ratio of 10 percent and no excess reserves. The currency drain ratio is 50 percent. Then the central bank increases bank reserves by $1,200. What is the initial increase in the monetary base? b. How much do the banks lend in the first round of the money creation process? How much of the amount initially lent does not return to the banks but is held as curren- Set out the transactions that take place and calculare the amount of deposits created and the increase in the amount of currency held after the second round of the money creation process