Scenario 1 Consider an overlapping generations model with 100 lenders and 121 borrowers born in every period. Everyone lives for only two periods. Each lender is endowed with 20 goods when young and nothing when old. Each borrower is endowed with nothing when young and 10 goods when old. Let r be the gross real interest rate on private loans. Also, assume there is no fiat money or capital. Let cu be the consumtion in period i-1.2 for lenders and cus be the consumption in the period i-1,2 for the borrowers. Also, let / be amount of goods lent and let b the amount of goods borrowed.. Refer to Scenario 1. Suppose lenders want to save 10r each and borrowers want to borrow 10/r each. At the market clearing r. how much does each old borrower consume? 10 100 00

Scenario 1 Consider an overlapping generations model with 100 lenders and 121 borrowers born in every period. Everyone lives for only two periods. Each lender is endowed with 20 goods when young and nothing when old. Each borrower is endowed with nothing when young and 10 goods when old. Let r be the gross real interest rate on private loans. Also, assume there is no fiat money or capital. Let cu be the consumtion in period i-1.2 for lenders and cus be the consumption in the period i-1,2 for the borrowers. Also, let / be amount of goods lent and let b the amount of goods borrowed.. Refer to Scenario 1. Suppose lenders want to save 10r each and borrowers want to borrow 10/r each. At the market clearing r. how much does each old borrower consume? 10 100 00

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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