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Henry lives in a world with two time periods. His incomes in Period 1 and Period 2 are $350 and $3 75, respectively. He receives
Henry lives in a world with two time periods. His incomes in Period 1 and Period 2 are $350 and $3 75, respectively. He receives the incomes at the beginning of each period. a. If the interest rate, expressed as a action, is 0.08 per time period, what is the present value of his lifetime income? What is the future value of his lifetime income? Draw his intertemporal budget constraint. Make sure to show your work and label all curves and axes. On the same axes, draw Smith's intertemporal budget constraint when r=0.20. Make sure to show your work and label all curves and axes. Suppose Henry views current and future consumption as perfect, one-forone substitutes for one another. Find his optimal consumption bundle. Show your work. Suppose Henry views current and future consumption as one- to-on complements. Find his optimal consumption bundle. Show your work
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