Household summary Households take prices rt+1 and we as given (exogenous in their minds) Choose C1,t, k2,t+1, and C2,6+1 to maximize utility 3 equations, 3 unknowns, 2 exogenous variables Exercise 3: Suppose that the household utility function is U(C1,1,C2,4+1) = log(C1,t) + Blog(C2,t+1) with 0