Consider a consumer maximising a two-period consumption functionU(C₀,C₁) sub- ject to the income stream{Y₀,Y₁}and interest rater.

1. (a)Show diagrammatically that for this consumer a rise in income in any one period will lead to a rise in consumption in both the periods.
2. (b)What effect does a rise in interest rate have on consumption in period 1? Explain