Answer Happy

The production function in the Diamond Dylivi model species that one unit of output (e. com) invested at tim transformed into one unit if harvested at time 1 and R units if harvested at time 2. where R$1. Suppose a bank off customers a contract where it pays Ix if the customer closes the contract at time 1 and Rx if the customer closes time 2, where is the amount initially deposited. This contract is not feasible, but means the bank is essential not feasible and means the bank is inessential feasible and means the bank is essential feasible, but means the bank is inessential Question 7 The production function in the Diamond-Dybvig model specifies that one unit of output (e.g., corn) invested at tim transformed into one unit if harvested at time 1 and R units if harvested at time 2. where R>1. Suppose a bank offe customers a contract where it pays some amount y 1x if the customer closes the contract at time 1 and some am than y but less than Rx if the customer closes the contract at time 2, where x is the amount initially deposited. This essential, but the contract is unstable essential and the contract is stable inessential and the contract is unstable Inessential, but the contract is stable