answer the given Question

Assume that a consumer lives for 2 periods. The consumer receives an endowment of 25.0 in period 1, and E1 100D in period 2. She pays a tax of 1% of income in both periods. The real interest rate in the economy.r is 5% (EDS). a} Write down the intertemporal budget constraint of the consumer. Evaluate its slope and both intercepts. o} The consumer has a CODb-DDUQIEIS utilityr function such that o = c,\"c:". Find the optimal consumption in periods '1 and E. c} How would consumption in period 1 react if there is an increase in the interest rate? Note you do not need to give a numerical answer but only explain the effect. _.' |_