1 EconomicsQuestion 1Consider an OLG model where each person is endowed with y when young and nothing whenold with a population growth rate of n.Also, assume the money supply grows at a rate of z>1. If a lump sum tax r is collected fromold generation, what are the first-and second period budget constraints?a) C₁,t + vemt ≤yC2,t+1Vt+1mt - TOb) C₁,t +v+1m₁ ≤ yC2,t+1+vim ≤ TOc) C₁,t + vyC2t+1+T ≤ Ut+1d) C₁,t + vemt ≤ yC2,t+1+V+1 m₂ ≤ TQuestion 2Which of the following statement is not correct?a) If population growth rate is greater than one, the supply of money increases in eachgeneration.b) Expansion of money supply creates inflationc) The value of money will decline over time if z <1d) the rate of return of fiat money isQuestion 3Consider the money supply grows at a rate of z>1 and price level for period t is p. What isthe relationship between money growth rate and price level?a) Pt+1% = Pb) P-1=%Pt+1Oc) P= Pt+1Vyd) Pt+1=2pt

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Consider an OLG model where each person is endowed with y when young and nothing when old with a population growth rate of n. Also, assume the money supply grows at a rate of z>1. If a lump sum tax r is collected from old generation, what are the first-and second period budget constraints? Oa) C₁t+vim ≤ y C2,1+1+1m, T Ob) C₁,t +v+1m₁ ≤ y C2,1+1+v₁m ST c) C₁,t +Vt y C2+1 +7 Ut+1 d) C₁, +vem sy C2,1+1 +₁+1 me ST

Consider an OLG model where each person is endowed with y when young and nothing when old with a population growth rate of n. Also, assume the money supply grows at a rate of z>1. If a lump sum tax r is collected from old generation, what are the first-and second period budget constraints? Oa) C₁t+vim ≤ y C2,1+1+1m, T Ob) C₁,t +v+1m₁ ≤ y C2,1+1+v₁m ST c) C₁,t +Vt y C2+1 +7 Ut+1 d) C₁, +vem sy C2,1+1 +₁+1 me ST

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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