( mmma rk C: apmm:markmm _\\ , Z I\\ My Courses AP/ECON3430 N . Monetary E... Q27long (10 points) Suppose we change the endowments of coconuts Half the young people. known as borrowers, are endowed With no coconuts when young and go coconuts when old. The other half, known as lenders. are endowed with y, coconuts when young and no (oconuts when old. Suppose both agents only have access to borrowing and lending a) Write down their budget constraints and deduce their lifetime budget constraint b) Plot their lifetime budget (onstraints Suppose the substitution eect dominates the income eect c) Explain how the demand and supply of loans is determined and plot the demand and the supply curves and denote the market clearing interest rate as r: d) Suppose the borrowers endowment, yb. declines. Explain how the demand for loans (urve changes [assume consumption when young and consumption when old are normal goods. i.e.. demand fails when income falls). Plot the new demand curve and denote the new market clearing interest rate as r; Suppose We introduce capital in this model. The marginal product of capital is constant at x. Suppose that r;