Macroeconomics theory

Part 6: Consumption Theory (20 points total) There are two agents in our economy, A and B. The two agents have the same income (4,4) and the same utility function (where W(C}=UC each period). Agent A has ,3=1 while agent B has =D. 1. What is the tangency condition for each agent? (2 points) 2. What is the intertemporal budget constraint (which is the same for both agents)? (1 point) 3. Derive each agent's consumption and saving functions. (4 points) 4. Solve for the equilibrium interest rate. (3 points) 11 5. Given your previous answers, solve for the consumption in both periods of the A agent, as well as saving by the B agent in the rst period. (3 points)