Answer True, False or Uncertain. Briefly explain your answer

1. A permanent increase in money supply cannot affect any variable in the OLG model

of money.

2. In the OLG model of money, fiat money does not pay interest, so money’s rate of

return is 1.

3. Suppose that the government finances its expenditure through seigniorage revenue.

There exists an upper limit on the amount of the seigniorage revenue that can be generated.

4. The original Phillips curve finds that there is a negative correlation between inflation

and output growth.

5. The Lucas critique indicates that the government can use a random monetary policy

to stimulate output.

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