econ qui... answer them all

Bank Run Model (40 points) This exercise leads you to go through the derivation of the bank run model. There are 3 periods. At f = 0, all agents start with 1 unit of endowment and can invest in 2 different technologies: 1. A short term technology that delivers 1 unit of output at { = 1 for each unit of output invested at t = 0. 2. A long term technology that delivers R > 1 units of output at t = 2 for each unit of output invested at { = 0. However, if this technology is liquidated at f = 1 it delivers L B? (13 points) 5. What happens for entrepreneurs if A /? (5 points)1 IS-LM Model (30 points) a). Suppose that the economy has no money market and that I, G, T are given. Let C'= cote (Y-T). Derive equilibrium output and the government spending multiplier. (8 points) b). Assume now that investment is I = by + bY - bi. Suppose that the interest rate is exogenously fixed. Derive equilibrium output and the government spending multiplier. How does this spending multiplier compare to the one you found in part a)? (8 points) c). Introduce a money market in which MP = diY -dzi. Derive equilibrium output. Derive the government multiplier. Is it bigger or smaller that the one you computed in part b)? Provide some intuition for this result. (14 points) 2 The Amplification Mechanism (30 points) To answer this question, you need to read page 74 - 83 of the lecture notes. Assume f'(k)