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Unformatted text preview: goods, and denote the lump-sum transfer by a t +1 . Note that we are considering stationary allocations. 2. What is the feasiblity constraint for this economy? a. c 1 + z n c 2 = y 1 + z n y 2 b. c 1 + z n c 2 + a = y 1 + z n y 2 c. c 1 + 1 n c 2 = y 1 + 1 n y 2 d. c 1 + 1 n c 2 + a = y 1 + 1 n y 2 e. None of the above. 3. Which ones of the following statements are always true? a. v t +1 v t = p t +1 p t b. If z > n , then there is deﬂation in the economy. c. If z = n , then the equilibrium outcome is Pareto eﬃcient. 1 d. a) and c). e. None of the above. 4. Now assume that y 2 ≥ y 1 > 0. What is true about the new equilibrium? I. There will be no trade in the equilibrium. II. The CE with money and the CE without money will have the same equilibrium allocations. III. The CE with money is still Pareto eﬃcient. a. I and III. b. II and III. c. I and II. d. I, II, and III. e. None of the above choices. 2...
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- Fall '11
- Economics, population growth rate, Sample Midterm Questions, International monetary systems, log utility function