1. Consider an individual who lives only two periods. Let c1 > 0 be consumption in period 1 and c2 > 0 be consumption in period 2. Therefore, (C1, C2) is the (intertemporal) consumption bundle. Let p, be the price of the good in period 1. In period 2, the price is higher due to inflation. Let 7 6 (0, 1) be the rate of inflation. For t = 1, 2, her (per-period) income is It > 0. In addition to receiving income, she may save or borrow in period 1. Let s E (-12/(1 + i), /1) be the amount that is saved or borrowed in period 1. If she saves (i.e., s > (), then she receives back her savings plus interests at the beginning of period 2. If she borrows (i.e., s