Question: Suppose in an economy utility function is given by: info) + blnfr:2,t+1} where, b is a positive parameter. Given the young person's real demand for

$Suppose in an economy utility function is given by: info\") +$

Suppose in an economy utility function is given by: info\") + blnfr:2,t+1} where, b is a positive parameter. Given the young person's real demand for money is vtmt = q; (3} Prove that real money balances is given by: qal-zbyfl + b). (b) Derive expressions for the lifetime consumption pattern: c1} and cit\" . (c]What effects does an increase in b have on real money balances and the lifetime consumption pattern? Give an intuitive interpretation of the parameter b

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Purpose: What do we seek to achieve with our behaviour?