Suppose an economy with constant population

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Suppose an economy with constant population where the individuals want to keep 5000 goods in their bank deposits in each period. The economy has an endowment of 10, 000 goods per period. There is a total stock of capital not intermediated of 1000 goods in each period. Bank deposits are the only form of money. Bank deposits are subject to a reserve requirement of 20%. The net real rate of return on capital is 10% per period. After complying with the reserve requirements, the bank invest the rest of its liabilities on capital. Individuals do not own capital. The monetary base is 2000 units of money per period. Compute: 1. The price of a good in terms of fiat money 2. The real return on bank deposits offered in a competitive industry of intermediation 3. The total stock of M1 4. The money multiplier 5. The stock of capital 6. The real GDP

Reference no: EM131099868

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