Question: Please show your working steps and explain. I really appreciate it:) Example 4.3 Suppose there are three types of people in our model of two

Please show your working steps and explain. I really appreciate it:)

Please show your working steps and explain. I really appreciate it:) Example

Example 4.3 Suppose there are three types of people in our model of two countries and two currencies. Type a people can hold' only the money of country a, type b can hold only the money of country 12, and type c can hold the money of either country. Every person wants to hold 10 goods worth of money. There are 300 type a people, 200 type [9 people, and 100 type c people. There are 100 units of country a money and 200 units of country b money. a. Find the range of stationary equilibrium values for vfwf, and 42,. b. Now suppose that 100 type a people and 100 type b people become type c people (able to hold the money of either country). Now nd the range of stationary equilibrium values for vfmf, and e,. Has the range of equilibrium exchange rates expanded or contracted? Explain this change

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