ECON 3511 Money Banking and Financial Markets III, Semester 2, 2017.pdf

This preview shows page 1 - 3 out of 4 pages.

Course ID: 105517 Examination Semester 2, 2017 Course ID No COURSE NAME 105517 Money, Banking & Financial Markets III ECON 3511 Official Reading Time: Writing Time: Total Duration: 10 mins 180 mins 190mins Part Questions Time Marks A B C 2 1 1 out of 2 75min 60min 45min 20 20 10 Instructions Examination materials must not be removed from the examination room. Materials 3 pink books. Basic calculators without text memory, graphics or scientific capabilities are permitted. DO NOT COMMENCE WRITING UNTIL INSTRUCTED TO DO SOPage 1 of 4 See next Page
Course ID: 105517 Part A (20 marks) Answer both exercises in Part A in one SEPARATE examination book. Do not answer questions on this examination paper. Exercise 1 (10 marks) Consider two identical countries, Aand B, in our standard overlapping generations model. In each country, the population of every generation is 200, and each young person wants money balances worth 40 goods. Assume that the money of country Ais the only currency that currently circulates in the two countries. There are $1000 of country Amoney split equally among the initial old of both countries. a. Find the value of a country Adollar. b. Find the consumption of the initial old. Now, suppose country Bissues its own money, giving €12 to each of the initial old of country B. To ensure a demand for its currency, country Bimposes foreign-exchange controls. c. Find the value of one euro and the value of one dollar.

  • Left Quote Icon

    Student Picture

  • Left Quote Icon

    Student Picture

  • Left Quote Icon

    Student Picture