Suppose the old bankers on the central island own $5,000,000 of fiat money and creditors are owed $7,500,000.
a. Compute the price at which creditors be able to sell the debt they own.
b. How much interest will a banker be willing to pay after the debtors have arrived in order to have one more dollar of fiat money?
c. Suppose the central bank is willing to purchase $2,000,000 worth of debt, what will the price of the debt be in this case?