Consider an economy in which live two-period lives in overlapping generations but are endowed only in the first period of life.

Consider an economy in which live two-period lives in overlapping generations but are endowed only in the first period of life. Capital has a minimum size, k*, which is greater than the endowment of any single individual but less than the total endowment of a single generation. Capital pays a one-period gross real rate of return equal to x. The population grows 10 percent in each period. There exists a constant nominal stock of fiat money owned by the initial old.

a. In what sense is capital iliquid in this economy? Is fiat money subject to this same liquidity problem?

b. Describe an intermediary that might overcome the iliquidity of capital so that intermediated capital maybe used to acquire consumption in the second period life.

c. Suppose there is only one person in each generation who is able to run an intermediary. What is the minimum rate of return that person must offer to attract deposition? For what values of x can this person make profit?

d. What rate of return will be offered on deposits if there are many people in each generation able to run an intermediary?

Show more







Calculate Your Essay Price
(550 words)

Approximate price: $22

Calculate the price of your order

550 words
We'll send you the first draft for approval by September 11, 2018 at 10:52 AM
Total price:
$26
The price is based on these factors:
Academic level
Number of pages
Urgency
Basic features
  • Free title page and bibliography
  • Unlimited revisions
  • Plagiarism-free guarantee
  • Money-back guarantee
  • 24/7 support
On-demand options
  • Writer’s samples
  • Part-by-part delivery
  • Overnight delivery
  • Copies of used sources
  • Expert Proofreading
Paper format
  • 275 words per page
  • 12 pt Arial/Times New Roman
  • Double line spacing
  • Any citation style (APA, MLA, Chicago/Turabian, Harvard)

Our guarantees

Delivering a high-quality product at a reasonable price is not enough anymore.
That’s why we have developed 5 beneficial guarantees that will make your experience with our service enjoyable, easy, and safe.

Money-back guarantee

You have to be 100% sure of the quality of your product to give a money-back guarantee. This describes us perfectly. Make sure that this guarantee is totally transparent.

Read more

Zero-plagiarism guarantee

Each paper is composed from scratch, according to your instructions. It is then checked by our plagiarism-detection software. There is no gap where plagiarism could squeeze in.

Read more

Free-revision policy

Thanks to our free revisions, there is no way for you to be unsatisfied. We will work on your paper until you are completely happy with the result.

Read more

Privacy policy

Your email is safe, as we store it according to international data protection rules. Your bank details are secure, as we use only reliable payment systems.

Read more

Fair-cooperation guarantee

By sending us your money, you buy the service we provide. Check out our terms and conditions if you prefer business talks to be laid out in official language.

Read more

Order your essay today and save 10% with the coupon code: best10