Question :Consider an economy with a shrinking stock of fiat money. let Nt=N, a constant, and Mt=zMt-1 for every period t, where z is positive and less than 1.
The government taxes each old person T goods in each period, payable in fiat money. it destroys the money it collects.
(a). Find and explain the rate of return in in a monetary equilibrium. (b).