Question: Part B (10 marks) Answer Part B in one SEPARATE examination book. Do not answer questions on this examination paper. Consider two identical countries. A

 Part B (10 marks) Answer Part B in one SEPARATE examination

Part B (10 marks) Answer Part B in one SEPARATE examination book. Do not answer questions on this examination paper. Consider two identical countries. A and 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 oi country A is the only currency that currently circulates in the two countries. There are $1000 of country A money split equally among the initial old of both countries. a. Find the value of a country A dollar. b. Find the consumption oi the initial old. Now, suppose country B i53ues its own money, giving 12 to each of the initial old of country B. To ensure a demand tor its currency. country B imposes fereign-exchange controls. c. Find the value of one euro and the value of one dollar. d. Find the con3umption of the initial old in country A and in country 3. Who has been made better of! by this policy switch

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