Question: Plz Plz help. This is complete Assume an overlapping generations model with commodity money [gold] and constant population N. Each person is endowed with y

Plz Plz help. This is complete

Plz Plz help. This is complete Assume an overlapping generations model with

Assume an overlapping generations model with commodity money [gold] and constant population N. Each person is endowed with y units of the consump- tion good when young and nothing when old. Assume that each young person wishes to acquire money balances worth a proportion o: of her endowment. regardless of the rate of return. The initial old own M9 units of gold [mg per old). Assume that the intrinsic value of gold is .179. Suppose that the initial old choose to sell their gold for consumption goods rather than consume the gold. {a} 1White the equation that characterises equilibrium in the money market and obtain the resulting expression for the gold price of. ['20 marks) Assume that there is a second storable good. silver. that can be used as money just as easily as gold can. The initial old own Mf units of silver and the intrinsic value of silver is E". {b} Find the money marketclearing condition if both silver and gold are used as money and comment on your results. {30 marks} Assume the following values: M3 = 100. N = 10D. y = ll]. :7" = 2, M'=50. i75=1, cr=1f2. [c] Find of for u: = 1.5. where v: is the price of silver. Briefly discuss whether your results imply an equilibrium in which both gold and silver are used solely as money. (30 marks) [d] Briefly explain the effects on of" as v: increases. {20 marks)

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