Part 1: Mathematical Problems
1. Romer, problem 9.2.
2. Suppose that .
a. Apply the formula to this particular utility function to get an equation for money demand as a function of .
b. Take the log of both sides of the resulting equation. Derive an equation for (log) nominal money holdings as a function of everything else.
c. Does your final equation in (b) make sense?
Part 2: Analytical Problems
TYPE succinct (1 page or less!) answers to each of the following:
1. White: chapter 1, #7
2. Is involuntary unemployment a coherent concept? Critique the arguments of one of the following: Lucas, Carmichael, Shapiro and Stiglitz, or Summers (from the week 1 readings).