d) (10 points) Suppose we are at the repayment threshold where GDP = YT. If the parameter c falls to .20, how would your diagram change and what would happen to the repayment threshold (Y ) and why? Given the same GDP (i.e., we are holding GDP constant), would it better to pay or to default? Show your work. What is the new repayment threshold Y,? e) (10 points) Let's return to the original conditions where c = .25 and we are at the (original) repayment threshold where GDP = YJ. Suppose this emerging economy elects a new prime minister that has a poor history in terms of corruption and thus the interest rate r rises to 10%. How would your diagram change and what would happen to the repayment threshold (Y,) and why? Given the same GDP (i.e., we are holding GDP constant), would it better to pay or to default? Show your work. What is the new repayment threshold Y,? f) (10 points) Let's return to the original conditions where c = .25 and we are at the (original) repayment threshold where GDP = YJ. Suppose alternatively that this emerging economy elects a new prime minister that has no experience with counter-cyclical policy and thus, the (expected) volatility of output rises. Explain what happens to the repayment threshold Y, the repayment region, and the probability of default and why