All in class assumptions hold. Consider the following indefinitely living economy:

World interest rate=5%

Initial wealth = 0

Natural level of Production Q= 180 Round any number off to 3 decimal places

There is a shock to production which lowers output by -88 in period 0. After period 0 Output is back to the normal level.

a. Please calculate PV of output for an indefinitelyliving Economy

Using the numbers and yourresult from the previous Question,please calculate the consumption in eachPeriod forPeriods 0, 1, 2 and 3.

Using the numbers and yourresult from the previous Question,please calculate the consumption in eachPeriod forPeriods 0, 1, 2 and 3.