This question helps us understand the effects of government stablization policy in response to productivity shocks. There is a country with a single household who cares about consumption of cupcakes and leisure. The household has h = 100 units of time. The household's preferences over consumption of cupcakes and leisure is given by the following utility function: U(c, ) = 2c 600 ln(). For questions (2.A.) and (2.B.), assume the following regarding production and government. There is a single firm which makes cupcakes using only labour (magical cupcakes). The production function for producing cupcakes is given by Y = zND. 1