Questions; micro economics

Question 3 (20 points) Consider the following decentralized business cycle model. The representative household makes consumption (C) decisions to maximize lifetime expected utility: Ex E A' (In Ct) (1) subject to their budget constraint: Gith = w,NorKe+le (2) where w is the real wage, N is hours worked, K is capital, / is investment, * is the rental price of capital and II are profits from firms. As usual, 0 8 - 1. New money is introduced, or withdrawn if # 0, u"(c) 0, f"(x)