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Consider our model of illiquid capital. Suppose the two-period real return on capital is=1.44, the rate of population growth is=1., and no money growth, i.e.,=1.

Consider our model of illiquid capital. Suppose the two-period real return on capital is=1.44, the rate of population growth is=1., and no money growth, i.e.,=1. Find the following rates for one and two periods clearly showing your calculations and reasoning:

a) Real rate of interest

b) Nominal rate of interest

c) Rate of inflation

d) Real rate of return on money

e) How would your answer to part (a) change iftook the value of1.3?

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