DRaw a diagram illustrating the economics of negative production externalities

Discuss the following concepts; - Equilibrium level of employment. - Full employment Eevel. I Excess demand. - Deficient demand. I Excess demand. - Deflationary gap. - Inflationary gap. Discuss the classical theory of income and employment. Discuss the difference between autonomous investment and induced investment. A market consistent economic scenario generator (ESG) is being built for yield curves that will be used to calculate prices for interest rate derivatives. The LIBOR market model has been chosen as the underlying model, implemented using a single stochastic factor with discrete time steps. The numeraire for the model is a rolling deposit, i.e. one where fl is invested at time zero in a bond maturing at time ; with the proceeds at time ( being invested in a bond maturing at time ty, and so on. The underlying stochastic differential equation (SDE) within the model is: dF; (1) F(!) where . For) is the forward rate between times f and do as seen at time f, expressed with a compounding period of 6: = 41 -4, using actual actual day count . P(t, {) is the price at time : of the zero-coupon bond that pays 1 at fo . 4:(7) is the volatility of F.(f) at time t . v.(0) is the volatility of P(t, f ) at time t * 7:(() is an index for the next reset date at time t, so: m([) = 1 for t = ] m(D) = 2 fort