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

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

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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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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