# What is the demand for money?

What is the demand for money?.

Consider an overlapping generations economy where there are Show more Money Demand and Monetary Equilibrium: Consider an overlapping generations economy where there are N consumers born each period and each lives for two periods young and old. Each is endowed with w units of the good when young and none when old. Preferences are given by U = Ln(c1) + bLn(c2). A. Find the consumers desired savings where 1+r is the return when old. (1 point) B. Suppose the only asset is money m/p. Let 1+rm be the return to holding money where 1+rm = 1/(1+p) = p/p p is todays price level and p is the future price level. What is the demand for money? (1 point) C. Suppose the supply of money increases each period at rate 1+x i.e. Mt+1 = (1 + x)Mt. (Imagine the government prints new money each period and gives it to the old.) What is the Stationary monetary equilibrium (SME) condition? (1 point) Show less

What is the demand for money?

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