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Suppose that each of the economy's 600 young agents has deposits worth 100 goods with a bank no matter what the return. Assume that the
Suppose that each of the economy's 600 young agents has deposits worth 100 goods with a bank no matter what the return. Assume that the reserve requirement is 10 percent and the monetary base is $3,000. Let x=X>n. a) What is the total nominal money stock? b) What is the value of a unit of fiat money? c) What is the price of a good in units of fiat money? d) How many goods would the government acquire if it increased the monetary base by 50 percent? e) What is the real value of investment by banks? f) How would the total nominal money stock and the real investment by banks change if the reserve requirement doubled to 20 percent? Explain the intuition behind your result. g) Suppose the reserve requirement stayed at 10 percent, but the monetary base increased to $6,000. Explain the effect on the total nominal money stock and the real investment by banks
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