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Home / Questions / In the economy of Briskland, the commercial banks have deposits of $500 billion. Their re

In the economy of Briskland, the commercial banks have deposits of $500 billion. Their re

 In the economy of Briskland, the commercial banks have deposits of $500 billion. Their reserves are $50 billion, 80 percent of which is in deposits with the Central Bank. There is $20 billion in Central Bank notes outside the banks, and there are no coins.

a)What is the monetary base?

b)If all the deposits are money, what is the total quantity of money?

c)What is the banks' reserve ratio?

d)What is the currency drain as a percentage of the quantity of deposits?

4) Friedmania is a country in which the quantity theory of money operates. The country has a constant population, capital stock, and technology so real GDP does not change. In 2010, real GDP was $500 million, the price level, measured by the GDP deflator, was 150 and the velocity of circulation of money was 10. (Because the price level is measured by the GDP deflator, it must be divided by 100 before it is used in the equation of exchange.) In 2011, the quantity of money increased by 20 percent.

a)What was the quantity of money in 2010?

b)What was the velocity of circulation in 2011?

c)What was the price level in 2010?

Dec 10 2019 View more View Less

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