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Consider a household in the two-period consumption-savings model. The household has well-behaved preferences over period-1 and -2 consumption given by uci,c2), is are con- strained

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Consider a household in the two-period consumption-savings model. The household has well-behaved preferences over period-1 and -2 consumption given by uci,c2), is are con- strained by their period budget constraints, At = (1 + i)At-1 + Yt - Pict for t = 1,2. (a) Use the Fisher Equation to transform the period budget constraints into real terms. (HINT: You may convert one period budget constraint directly, say for t = 1, and generalize to the other.) (b) Use your answers from

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