Consider a commodity money model economy (without any fiat money) similar to the one described in Chapter 3 but with the following features: - - There are 800 identical people in each generation. ASSUME STATIONARY EQUILIBRIUM WITH NO POPULATION GROWTH. - Each individual is endowed with 150 units of the consumption good when young. - To keep things simple, assume that each of the young wants to acquire money balances worth 10% of his young endowment, regardless of the rate of return. - The initial old own 150 units of gold and 80 units of silver. Both gold and silver could be used for consumption or as a medium of exchange or both. - Assume that individuals are indifferent between consuming 1 unit of gold and consuming 3 units of the consumption good and also indifferent between consuming 1 unit of silver and consuming 1.5 units of the consumption good. Let number of units of gold purchased by each individual is given by, mgr, price of gold is given by v ', number of units of silver purchased by each individual is given by, mg, price of gold is given by v51. Both gold and silver can be stored and easily exchanged. a. Write down the lifetime budget constraint of an individual by including the information above (with gold and silver as forms of money). Show your steps. (3 marks) b. Consider the economy with gold only m parts b and c of the question. Silver is not available as commodity money for parts band c and gold is the only commodity money in the economy. Suppose the initial old choose to sell their gold for consumption goods instead of consuming it. Write an equation that represents the equality of supply and demand for gold. Use it to find the number of units of gold purchased by each individual and the price of gold. Explain your steps. (2+2+2 = 6 marks) c. At this price of gold, will the initial old actually choose to consume any of their gold? Explain. (1 mark) d. Now consider both gold and silver available in the economy._Find the money market clearing condition if both gold and silver are used as money. For what range of values of silver, is there an equilibrium in which both silver and gold are used only as money (and not consumed)? Explain your steps. (2+2 = 4 marks) . In general, based on the discussion from Chapter 3, identify one major reason why fiat money is preferred over commodity money? Your answer must reflect the key points discussed in class on this content. (2 marks)