Consider an OLG economy where each generation has 50 bananas when young, and 10 bananas when old. Suppose central bank prints out 4 unit of money, give to gen 0 for free. Solve for equilibrium exchange rate "1 money = ??? bananas".

Consider an OLG economy where each generation has 50 bananas when young, and 10 bananas when old. Suppose central bank prints out 4 unit of money, give to gen 0 for free. Solve for equilibrium exchange rate "1 money = ??? bananas".

Brief Principles of Macroeconomics (MindTap Course List)

8th Edition

ISBN:9781337091985

Author:N. Gregory Mankiw

Publisher:N. Gregory Mankiw

Chapter13: Open-economy Macroeconomics: Basic Concepts

Section: Chapter Questions

Problem 9PA

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Question

Consider an OLG economy where each
generation has 50 bananas when young, and
10 bananas when old.
Suppose central bank prints out 4 unit of
money, give to gen 0 for free. Solve for
equilibrium exchange rate "1 money = ???
bananas".
Consider an OLG economy where each
generation has 20 bananas when young, and
12 bananas when old.
Suppose central bank prints out 2 unit of
money, give to gen 0 for free. Solve for
equilibrium exchange rate "1 money = ???
bananas".

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