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Suppose that in Mysore, the reservedeposit ratio is res = 0.5 - 2 i , where i is the nominal interest rate. The currencydeposit ratio
Suppose that in Mysore, the reservedeposit ratio isres= 0.5 - 2i, whereiis the nominal interest rate. The currencydeposit ratio is 0.2 and the monetary base equals 100. The real quantity of money demanded is given by the money demand functionL(Y, i)= 0.5Y- 10i,whereYis real output. Currently, the real interest rate is 5% and the economy expects an inflation rate of 5%. The money multiplier equals
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