ECON 3511 sem 1 2015 Nicolas.pdf - Examination Semester 1...

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Page 1 of 4 See next Page Examination Semester 1, 2015 Course ID No COURSE NAME 105517 Money, Banking & Financial Markets III ECON 3511 Official Reading Time: Writing Time: Total Duration: 10 mins 180 mins190mins PartQuestionsTimeMarksA B C 2 1 2 1 hour 1 hour 1 hour 15 15 20 _______Total: 50 InstructionsExamination materials must not be removed from the examination room. Materials3 pink books. Calculators with no text memory, graphics or remote capabilities are permitted. DO NOT COMMENCE WRITING UNTIL INSTRUCTED TO DO SO
Page 2 of 4 See next Page Part A (15 marks) Answer ALL questions of Part A in one SEPARATE examination book. Do not answer questions on this examination paper. Allow 60 minutes for Part A. Exercise 1 (7.5 marks):Consider two identical countries in our standard overlapping generations model. In each country, the population of every generation is 100, and each young person wants money balances worth 10 goods. There are $100 of country amoney and €400 of country bmoney. The exchange rate is fixed at 1. There are no foreign-currency controls, and the monetary authorities do not cooperate. Each country is willing to raise up to

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