Suppose in the first model in this chapter that there is a limited commitment friction and the possibility the nation could default in the current or future periods. Suppose that, if the nation does not default, then the limited commitment constraint does not bind. Could default still be preferred in the current period to not defaulting? Explain, with the aid of a diagram. Using the diagram to the right, demonstrate a scenario with indifference curves where the nation prefers to default. 1.) Use the 3-point curve drawing tool to draw an indifference curve for the nation when choosing not to default and consuming at point B, where the constraint does not bind. 2.) Use the 3-point curve drawing tool to draw an indifference curve for the nation when choosing to default and consuming at point A. Carefully follow the instructions above, and only draw the required objects.