Consider an economy in which the central bank is willing to loan any quantity of reserves to
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Consider an economy in which the central bank is willing to loan any quantity of reserves to banks. Let the gross real return on capital be x.
a. What amount would a bank choose to borrow if the central bank rate of discount window loans is less than ?
b. Reconsider your answer to part a but with capital exhibiting diminishing marginal product.
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Let be the rate that the Central Bank charges and le...View the full answer
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Related Book For 
Modeling Monetary Economies
ISBN: 978-1107145221
4th Edition
Authors: Bruce Champ, Scott Freeman, Joseph Haslag
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