Consider closed economy where the utility function of the representative individuals is given by U-InC,+InC2. In this economy, money demands in period 1 and 2 are M/P=C(1+1/i) and M2/P2-C2 and the Fisher equation holds instantaneously. Prices are flexible. Along the exercise, assume that G1-G-T2=0, Q2=100, Mo=160. In the baseline T=0, M1=M2-160 and Q1-100. The government budget constraint is T+ (M1-Mo)/P1+[(M2-M1)/P2]/(1+1)=G When applicable, insert numbers with 3 decimal places (e.g. 0.333333 insert as 0.333) a) Baseline: Describe the initial equilibrium with Q-100 and Q2-100 e Mo-M1-M2=1 60 1+r = C = C2=