Question: J Consider a version of the economic model with the associated assumptions which the money growth rate is a random variable. Let the probability be

J Consider a version of the economic model with the associated assumptions which the money growth rate is a random variable. Let the probability be 4/5 that a = 1 and the probability be 1/5 that g; = 2. The realization of the monetary policy (the realized value ong is kept secret from the young until all purchases have occurred that is, people do not learn Mt until period t is over. Prices are only thing directly observable by the young. Let l(p) = 5 + 0.219% in island i at time t.

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