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Suppose that domestic credit equals $1000 million, foreign exchange reserves $80 million, the money multiplier =2, the fraction of nominal income that individual desire to
Suppose that domestic credit equals $1000 million, foreign exchange reserves $80 million, the money multiplier =2, the fraction of nominal income that individual desire to hold in money balances is 20%, the foreign price level is 1.2, the spot exchange value of the domestic currency is 2.
What is a) the money stock in the domestic economy b) the level of real income of the domestic economy?
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