Multiple part question, answer all parts: The Island of Nook is a fictional island nation where bells
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Question:
Multiple part question, answer all parts:
The Island of Nook is a fictional island nation where bells are the money of the island, turnips and tarantulas are commodities that individuals and companies can invest in through speculative assets (similar to oil futures or stocks), and the central bank (The Bank of Nook), is ran by Tom Nook.
Assume that the Bank of Nook decides to lower the interest rate paid on savings (reserves) held at the bank from 5% to .5%:
Part 1:
What will this rate change do to savings at the bank?
Part 2:
What will likely happen to investment in turnips and tarantulas?
Part 3:
What will happen to the supply of bells (the money supply)?
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