where n-0 I10 /11 is real profit income received at the beginning of the period, mo MOP] is initial real money balances, and w W /P] is the real wage rate.

Equation (5.3) says that the excess of income over consumption spending is to be saved in the form of additional money balances. The budget restriction can also be

.1111t sb use Lai,:

ac '10

- =L .

- =

a

-14116 dia AWL. Adholhari....NACti 4 ,

-

At 108 Chapter 5: The Macroeconomics of Quantity Rationing