Q1. Suppose we have two economies- let's call them earth and mars- that are identical, except that one begins with a stock of ideas that is twice as large as the other. A/Earth0=2* A/Mars0. The two economies are so far apart that they don't share ideas and each evolves as a separate roomer economy. On a single graph (with a ratio scale), plot the behavior of per capita GDP on earth and mars over time. What is the effect of starting out with more knowledge?
Q2. Calvin Coolidge once said that "inflation is repudiation". What might he have meant by this? Do you agree? Why or why not? Does it matter whether the inflation is expected or unexpected?