2. (15 points) Suppose there are two groups of household, namely group A and group B. Each group has endowments in each period as (y0,y1), and both have identical preferences. For group A, the endowment is (10,0). For group B, the endowment is (0,10). The government is this economy spends G, and tax T. It uses budget-balanced policies in both period. Use the demand and supply diagram to graphically represent the equilibrium in the credit market. Assume dominant substitution effect. 2. (15 points) Suppose there are two groups of household, namely group A and group B. Each group has endowments in each period as (y0,y1), and both have identical preferences. For group A, the endowment is (10,0). For group B, the endowment is (0,10). The government is this economy spends G, and tax T. It uses budget-balanced policies in both period. Use the demand and supply diagram to graphically represent the equilibrium in the credit market. Assume dominant substitution effect