Question
In the economy of Nocoin the banks have deposits of $400 billion. Their reserves are $60 billion, two thirds of which is in deposits with
In the economy of Nocoin the banks have deposits of $400 billion. Their reserves are $60 billion, two thirds of which is in deposits with the central bank. Households and firms hold $40 billion in bank notes(dollar bills). There are nocoins!
Calculate the monetary base and the quantity of money.
Calculate thebanks' desired reserve ratio and the currency drain ratio(as percentages).
The monetary base is $
nothing
billion.
The quantity of money is $
nothing
billion.
Thebanks' desired reserve ratio is
nothing
percent.
The currency drain ratio is
nothing
percent.
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