3. Consider the dynamic model with money. (a) Write down the assumptions that is new by comparing to the model without money. (b) Write down household's budget constraint in each period, then combine the two budget constraints into one. (c) Derive the money demand flmction M d as a flmction of L(Y, r). (d) Suppose that there is a natural disaster that destroys some of nation's capital stock. The central bank's goal is to stabilize the price level. Given the goal, what should the central bank do in response to the natural disaster? Explain