Consider the interpretation of our model where the endowment y is in units of time and young individuals can choose to allocate time between leisure (ci, ) or labor (It). Suppose the money supply is growing at rate z > 1 (e.g. money supply doubles in each period) in all future periods. (a) Is the monetary equilibrium efficient? Why or why not? Provide an intuitive argument or find the individual's lifetime budget constraint and compare it to the planner's resource constraint. (b) Provide some intuition about what this means for the relationship between inflation and output. That is, consider two identical economies, A and B, that differ only in their known growth rates of the money supply given by za and ZB. Where is output higher? (c) Explain the relationship depicted in the Phillips curve