(c) [10 points] Suppose that the real rate of interest rises. Illustrate graphically what happens to the household's optimal consumption in period 1, c;? (d) [8 points] Due to COVID-19 pandemic in period 1, the government of this country announces COVID-19 income relief payment. However, this stimulus package will take effect in period 2. Dors this household increase the consumption in period 1? To support your answer, illustrate graphically how of changes.(2) [30 points] Consumption Theories Suppose the representative household's inter-temporal utility function in a two-period model is given by U(q,0) = 2va+1+p where p is the subjective discount rate. The budget constraint is given by ci + 1+ -0 = WI, where r is real interest rate and un is the labor income at time f = 1. Assume that there is no initial financial asset in the first period. (a) [6 points] Write an equation describing the household's optimal consumption decision, and interpret the optimality condition. 3 (b) [6 points] Based on your answer to part (a) above, list at least three differences between the Keynesian consumption function and the consumption function implied by this model