3. Consider a two-period small open endowment economy with free capital mobility. Households live for one period. The endowment is 10 in both periods. The utility function of households living in period 1 is InC, and that of households living in period 2 is InC2. The government lives for 2 periods and has access to the world financial market, where the interest rate is 10 percent r = 0.1. Government spending is 2 in both periods (G1 =G2 = 2). The government levies lump-sum taxes in periods 1 and 2, denoted 71 and 72, respectively. Households and government start their lives with no debts or assets. Finally, assume a benevolent government that cares equally about the welfare of both generations. Specifically, suppose the government utility is given by: InC1 + InC2 (a) Calculate 71 and 72. (10 marks) (b) Does the government tax both generations equally? Why or why not? (10 marks)