Banks in New Transylvania have a desired reserve ratio of 10 percent of deposits and no excess reserves. The currency drain ratio is 50 percent of deposits. Now suppose that the central bank increases the monetary base by $900 billion. How much of the initial amount loaned does not return to the banks but is held as currency? Why does a second round of lending occur? Calculate money multiplier in this example? What is the final increase in the quantity of money?
Banks in New Transylvania have a desired reserve ratio of 10 percent of deposits and no
How much of the initial amount loaned does not return to the banks but is held as currency?
Why does a second round of lending occur?
Calculate money multiplier in this example?
What is the final increase in the quantity of money?
Give typing answer with explanation and conclusion
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Colombia is the world’s biggest producer of roses. The global demand for roses
increases and at the same time Colombia’s central bank increases the interest rate.
In the foreign exchange market for Colombian pesos, what happens to:
The quantity of pesos demanded?
iv. The quantity of pesos supplied?
v. The peso-Canadian dollar exchange rate?
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