1. Hailey is a professor in the econ department. Let's assume that she lives only 2-periods. She is trying to keep her two periods' consumption the same. Her intertemporal budget constraint is given below. C + C 1+r (d) Explain what happens if r increases to = + W|N r = 0.5 Y = 10,000 Y = 15,000 (a) Derive her optimal consumptions. Is she a borrower or lender during her first period? (b) How the above result changes when Y increases to 15,000 (c) How the above result changes when Y increases to 18,000 Y 1+r