Question: 4. LO 3 Suppose, in the monetary intertemporal model, that the government can pay interest on money, inancing this interest with lump-sum taxes on consumers.

4. LO 3 Suppose, in the monetary intertemporal model, that the government can pay interest on money, inancing this interest with lump-sum taxes on consumers. If the nominal interest rate on money is the same as the nominal interest rate on bonds, determine the efects in the model, illustrating this in a diagram. Explain your results.

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