Assume a consumer who has current-period income y=200, future-period income y=150, current and future taxes t=40 and t=50, respectively, and faces a market real interest rate of r=0.05 or 5% period. The consumer wants to consume equal amounts in both periods; that is, he or she wants to set c=c, if possible. 1. Show the consumer's lifetime budget constraint and indifference curves in a diagram. 2. Galculate his or her optimal current-period and future-period consumption and optimal saving. and show this in your diagram. 3. Suppose that everything remains unchanged, except that now t=20 and t=71. Calculate the effects on current and future consumption and optimal saving, and show this in your diagram. 4. Now, suppose alternatively that y=100. fixing y=150. You cannot borrow at all s>0. Repeat parts (1) to (3), and explain any differences ( t=40 and t=50 in part (1), and t=20 and t=71 in part (3)). Do you think the timing of taxes matters in consumption allocation over a lifetime under a borrowing constraint? (a) Show the consumer's lifetime budget constraint and indifference curves in a diagram. (b) Calculate his or her optimal current-period and future-period consumption and optimal saving, and show this in your diagram. (c) Suppose that everything remains unchanged, except that now t=20 and t=71. Calculate the effects on current and future consumption and optimal saving, and show this in your diagram. (d) Do you think the timing of taxes matters in consumption allocation over a lifetime under a borrowing constraint? Assume a consumer who has current-period income y=200, future-period income y=150, current and future taxes t=40 and t=50, respectively, and faces a market real interest rate of r=0.05 or 5% period. The consumer wants to consume equal amounts in both periods; that is, he or she wants to set c=c, if possible. 1. Show the consumer's lifetime budget constraint and indifference curves in a diagram. 2. Galculate his or her optimal current-period and future-period consumption and optimal saving. and show this in your diagram. 3. Suppose that everything remains unchanged, except that now t=20 and t=71. Calculate the effects on current and future consumption and optimal saving, and show this in your diagram. 4. Now, suppose alternatively that y=100. fixing y=150. You cannot borrow at all s>0. Repeat parts (1) to (3), and explain any differences ( t=40 and t=50 in part (1), and t=20 and t=71 in part (3)). Do you think the timing of taxes matters in consumption allocation over a lifetime under a borrowing constraint? (a) Show the consumer's lifetime budget constraint and indifference curves in a diagram. (b) Calculate his or her optimal current-period and future-period consumption and optimal saving, and show this in your diagram. (c) Suppose that everything remains unchanged, except that now t=20 and t=71. Calculate the effects on current and future consumption and optimal saving, and show this in your diagram. (d) Do you think the timing of taxes matters in consumption allocation over a lifetime under a borrowing constraint