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Suppose utility equals 6!n(c1,t3) +3 IH(02't+12/3). Using the steps explained in the appendix (with stationary equilibrium): a. Find an expression for real demand for money
Suppose utility equals 6!n(c1,t\"3) +3 IH(02't+12/3). Using the steps explained in the appendix (with stationary equilibrium): a. Find an expression for real demand for money when y: 150 at the point where utility is maximized. Show steps. (5 marks) b. Derive expressions for lifetime consumption pattern corresponding to utility maximization denoted by c \"and 0 am where notations have usual meanings. Show steps. (5 marks). 0. If suppose the y increases to 200, how will such change affect the real demand for money expression you derived in part a. No derivation is required, intuitive explanation in 2-3 sentences will suffice as an answer. (2 marks)
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