An economy has a constant population. Everyone's demand for chequing deposits is5,000 goods in total in every period. The economy has a total endowment of 10,000goods per period. There is a total stock of unintermediated capital of 1,000 goods in each period. Bank deposits are the only form of money in the economy. Deposits of banks are subject to a 20 percent reserve requirement. The net real rate of return on capital is 10 percent per period. After meeting the reserve requirement, banks invest the remainder of all deposits into capital. Individuals do not hold capital. The fiat money stock is$2,000 per period. Capital takes two periods to generate final returns 25) What is this economy's real GDP? (A)16,050. (B)14,840. (C)11,560. (D)10,000
An economy has a constant population. Everyone's demand for chequing deposits is5,000 goods in total in every period. The economy has a total endowment of 10,000goods per period. There is a total stock of unintermediated capital of 1,000 goods in each period. Bank deposits are the only form of money in the economy. Deposits of banks are subject to a 20 percent reserve requirement. The net real rate of return on capital is 10 percent per period. After meeting the reserve requirement, banks invest the remainder of all deposits into capital. Individuals do not hold capital. The fiat money stock is$2,000 per period. Capital takes two periods to generate final returns 25) What is this economy's real GDP? (A)16,050. (B)14,840. (C)11,560. (D)10,000
Principles of Economics 2e
2nd Edition
ISBN:9781947172364
Author:Steven A. Greenlaw; David Shapiro
Publisher:Steven A. Greenlaw; David Shapiro
Chapter19: The Macroeconomic Perspective
Section: Chapter Questions
Problem 29P: The prime interest rate is the rate that banks charge their best customers. Based on the nominal...
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