Economics 10b Study Guide - Final Guide: Briey, 13 Minutes, Business Cycle
13 Dec 2018
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Please use a separate blue book for each question and write the. Question number on the front of the blue book. Please put your exam number on each book. Please do not write your name on your blue books. Problem 1 (13 minutes): state a set of assumptions on beliefs, prefer- ences, and technology, which jointly imply that marginal utility is a random walk. The weaker your assumptions the more credit you get. Then apply black- well(cid:146)s theorem to show that the following functional operator, b; is a con- traction mapping with respect to the supremum metric and the space of bounded functions on [0; 1): Here u is a bounded function on [0; 1) and (cid:14) and r are non-negative con- stants. Explain what assumptions, if any, you needed to make on (cid:14) and r: [note that i am not asking you to prove blackwell(cid:146)s theorem, just to state and apply it. ]
