Question 2: Ramsey Model with Fiscal Policy. Consider a Ramsey economy that is on its balanced growth path. Suppose the government announces at time 0 that at some later time, time t], investment income will begin to be taxed at rate r\". This tax will then be in place forever. Revenues from this tax will be rebated back to households as lump-sum transfer. (2a) Begin by describing and drawing the balanced growth before the policy an- nouncement. (10 points] {2b} Draw the phase diagram showing the dynamics of c and J: from the an- nouncement till t1. Interpret your answer. (20 points) {2:} Draw the phase diagram showing the dynamics of c and k after time h. Interpret your answer. (20 points) {2d} Can 45 change discontinuously at time h? Why or why not? (Ill points] Re} In light of your answers to parts (2b), {2c}, and (2d), what must :7 do at time 0? [1|] points} {2f} Analyse now the alternative policy where the government announces at time 0 that the tax on investment will be in place from time 0 till t1 and then it will be set to zero forever after. {20 points)