International Monetary Economics Problem Set 3 Assign Date: April 23, 2020 Due Date: May 6, 11:59pm 1. Constrained Optimization problem Maximize utility u(x,y)=x*y by choosing x and y, subject to the constraint x+2y=100. Here we assume that the price per unit x is 1 while the price of y is 2, and the budget available to buy x and y is 100. 2. Schmitt-Grohe, Uribe and Woodford, exercise 3.5. Exercise 3.5 (Debt Forgiveness) Consider a small open economy where households live for two periods and have logarithmic preferences 3. Exercise 4.5 4. Exercise 5.4 (Recommend to finish after we covered the lecture with investment)