Homework Exercises – 5

$1 million. Reserves ... Liabilities. Discount Loans $500,000. Reserves $500,000. The short-term nominal interest rate is 5%, with an expected inflation of 2%. Economists forecast that next year’s nominal rate will increase by 100 basis points, but inflation will fall to 1.5%. ... If excess reserves have increased by 100,000 dollars and the ... ................
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