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Question 5. Consider an economy in which the Central Bank is willing to loan any quantity of reserves to banks. Let the gross rate of

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Question 5. Consider an economy in which the Central Bank is willing to loan any quantity of reserves to banks. Let the gross rate of return on capital be :1: 1. What amount would a bank choose to borrow if the central bank rate of discount Window loans is less than x? 2. How would your answer change if capital has decreasing marginal returns

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