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

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Question

• Suppose y = 100 and at the golden rule allocation we have cR 20.
If n= 0.5, what is Ry
Answer:
• Suppose the rate of return on money is twice as high as the population
growth rate. Then the monetary equilibrium attains the golden rule
allocation. Yes or No? Explain why.
Answer:
• An increase in population growth rate n causes individuals to demand
more money when young and reduce their young age consumption. Yes
or No? Explain why
Answer:
*** ....*

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