There was no money in the economy until the central bank bought $200 worth of treasuries. In the first round of lending-depositing, the banks formed $34 of reserves and people retained $16 as paper currency.

(a) Find the desired reserve rate and the currency drain rate. Show work.

(b) Draw a scheme of blocks and arrows that shows how the money was created in the first round of lending-depositing. Calculate the quantity of money in the economy at the end of the first round of lending-depositing.

(c) Find the ultimate deposits, ultimate currency, and ultimate reserves. Show work.