In the economy of Nocoin, bank deposits are $300 billion. Bank reserves are $15 billion, of which
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In the economy of Nocoin, bank deposits are
$300 billion. Bank reserves are $15 billion, of which two thirds are deposits with the central bank. Households and firms hold $30 billion in bank notes. There are no coins. Calculate
a. The monetary base and quantity of money.
b. The banks’ desired reserve ratio and the currency drain ratio (as percentages).
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