For the following 5 short answer questions, note that the gross rate ofreturn for money is given byVe+1where n is population growth rate and z is the money supply growth rate.The rate of inflation is given byVt+1The social planner's budget constraint is given bywhere y is consumption good endowment of a young individual.Suppose the consumer's indifference curve has a slope equal toC25cand population growth is n 1.20. If c 20 and 120, thenwhat is y?%3DAnswer:• If money supply growth is z = 0.4 and n= 0.8, by reducing young ageconsumption by one unit and buying money with that unit, a consumercan increase old age consumption by 2 units. Yes or No? Explain whyAnswer: • Suppose y = 100 and at the golden rule allocation we have cR 20.If n= 0.5, what is RyAnswer:• Suppose the rate of return on money is twice as high as the populationgrowth rate. Then the monetary equilibrium attains the golden ruleallocation. Yes or No? Explain why.Answer:• An increase in population growth rate n causes individuals to demandmore money when young and reduce their young age consumption. Yesor No? Explain whyAnswer:*** ....*

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For the following 5 short answer questions, note that the gross rate of return for money is given by Ve+1 172 %3D where n is population growth rate and z is the money supply growth rate. The rate of inflation is given by 72 Vi+1

For the following 5 short answer questions, note that the gross rate of return for money is given by Ve+1 172 %3D where n is population growth rate and z is the money supply growth rate. The rate of inflation is given by 72 Vi+1

Microeconomic Theory

12th Edition

ISBN:9781337517942

Author:NICHOLSON

Publisher:NICHOLSON

Chapter17: Capital And Time

Section: Chapter Questions

Problem 17.2P

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