1. Both Mexico and the U.S. had roughly equal GDP per capita income in the year 1800 at $1,000 apiece. Over the course of 100 years Mexico’s GDP per capita growth rate was 2% while the U.S. growth rate was 3%. By the year 1900 the U.S. GDP per capita was $19,218, while Mexico’s was only $7,244.Briefly describe in at least two paragraphs, what “phenomenon” is causing such differences in GDP per capita over the 100 year period. Specifically, give me a brief description of what is causing this phenomenon to occur. You may write out a brief mathematical explanation to help explain, such as the one we did in class, but it is not necessary to receive full credit.Bonus Points: How would this phenomenon differ if we had economic decline? Would it be the same as the economic growth example? Why or why not?2. Briefly explain in at least two paragraphs, why creditors (Banks) are extremely concerned about inflation when contracts have fixed terms. Provide a brief explanation with mathematical/arithmetical figures to explain your argument.