Section A: Question 1-4, answer True, False or Uncertain. Briefly explain your answer.

1. The lack of double coincidence of wants precludes people from using credit for transactions.

2. When the population is growing, fixing the price level is the optimal policy.

3. To finance the same amount of government purchases, using a lump-sum tax is better than using the inflation tax (money creation).

4. In the Lucas price surprise model where monetary policy is nonrandom, the young can always infer which island they live on no matter how the young population is distributed between the two islands.