Consider an economy with a constant in which people wish to hold bank checking deposits worth a total of 5,000 goods in every period. The economy has…

Answer each part assuming that the central bank allows banks to borrow up to one half of required reserves at an interest rate of 1.08. 

  1. The price of a good (in dollars)
  2. The gross real rate of return on deposits that will be offered by banks in a competitive economy
  3. The total nominal money stock M1
  4. The money multiplier
  5. The total capital stock
  6. Real GDP

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