Determine the relationship between the interest rate and the rental price of capital using a no arbitrage argument that assumes that there are two ways for a household to save: buy a bond or a machine

a. Suppose that interest income is taxed at the rate of i . Note that the principal is not taxed. Assume that no other taxes are in place

b. Assume no taxes. Suppose output is no longer converted into capital one for one. Instead, that it takes pt units of output to buy a machine in each period.