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Business, 05.08.2021 01:30 kimmi1489

Consider an overlapping generations economy where people live for two periods --- young and old. Population and fiat money stock are constant. The banking sector is perfectly competitive. Banks can borrow from consumers (in the form of deposits) and invest in capital. One unit of capital produces 1.5 units of output in the next period. Consumers can either hold fiat money or make deposits at a bank. Making a deposit at a bank has a fixed cost of 10 goods. What is the desired savings level that makes a consumer indifferent between holding fiat money and making a deposit

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Consider an overlapping generations economy where people live for two periods --- young and old. Pop...

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