Roles money as typically taught in principles of economics

Reference no: EM133441774

Assignment:

This question is meant for you to sit back and think about what you can extract from the model if it is not to be taken literally (because all models are just caricatures of reality and by definition are incomplete descriptions of reality).

1. What are the three roles that money as typically taught in Principles of Economics?

2. Taking the baseline monetary OLG model literally, what features of the model economy enables fiat money to satisfy the three roles of money?

3. If we do not take the model literally (for example, that people hold on to money over say thirty years (approximately 1/2 of a life cycle)), what more fundamental forces of economic exchange in reality are we trying to capture with this OLG set-up?

Reference no: EM133441774

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