2 Consider an exchange economy inwhich all agents are the same and the representative agents utility function
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2 Consider an exchange economy inwhich all agents are the same and the representative agent’s utility function is: U(C1) + U(C2). Since everyone has the same endowment and the same preferences in equilibrium there is no trade. What can you say about the equilibrium real interest rate when
(a) Y1 = Y2.
(b) Y1 < Y2.
(c) Y1 > Y2.
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Related Book For 
A Course In Monetary Economics Sequential Trade Money And Uncertainty
ISBN: 978-0631215653
1st Edition
Authors: Benjamin Eden
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