Find the rate of return in in a monetary equilibrium

Reference no: EM13872960

Question :Consider an economy with a shrinking stock of fiat money. let Nt=N, a constant, and Mt=zMt-1 for every period t, where z is positive and less than 1.

The government taxes each old person T goods in each period, payable in fiat money. it destroys the money it collects.

(a). Find and explain the rate of return in in a monetary equilibrium. (b).

Reference no: EM13872960

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