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Consider the stationary equilibrium of the overlapping generations model with commodity money. Assume the population is constant. a] Characterize the equilibrium of the commodity money
Consider the stationary equilibrium of the overlapping generations model with commodity money. Assume the population is constant. a] Characterize the equilibrium of the commodity money market and explain possible outcomes when the supply of commodity money doubles. b) Explain why replacing commodity money with at money is a Pareto improvement. c] Explain why it is impossible for a growing economy to simoltaneousty have a constant money supply and constant nominal prices. Then discuss why maintaining constant prices in a growing economy is particularly difcult under a commodity money system
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