Problem 1. The government keeps the primary deficit at 2% of GDP. Real GDP grows at rate 1%. The real interest rate is 3%. (A) Write out the law of motion for the debt-to-GDP ratio br. Plot the phase portrait, find and indicate the steady state. (B) The government starts with the wealth-to-GDP ratio of 10%. Will the government keep accumulating debt? Use the phase diagram to analyze the dynamics. Plot the dynamic path. (C) Will such fiscal policy satisfy the No-Ponzi game condition? Problem 1. The government keeps the primary deficit at 2% of GDP. Real GDP grows at rate 1%. The real interest rate is 3%. (A) Write out the law of motion for the debt-to-GDP ratio br. Plot the phase portrait, find and indicate the steady state. (B) The government starts with the wealth-to-GDP ratio of 10%. Will the government keep accumulating debt? Use the phase diagram to analyze the dynamics. Plot the dynamic path. (C) Will such fiscal policy satisfy the No-Ponzi game condition