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Please give the answers to the following questions in detail using calculations. Please note that the questions may be different from those on the Internet,

Please give the answers to the following questions in detail using calculations. Please note that the questions may be different from those on the Internet, so please do not copy the answers from the Internet. Thank you very much.

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Question 4 Consumption (20 points)?' a) Using the permanent income hypothesis in a twoperiod setting. derive the consumption for a representative agent that pays Social Security (SS) in the rst period and will receive the amount (SS) in the second period as a government transfer to protect those retired. .'iprse-J 1:) Will this social security structure increase or decrease consumption (in comparison with no social security administration in the economy)? 5})sz c} How will the consumption choice change if the social security payment is paid with interests ((1+r) SS )? .prse' d) As a policymaker, which of the two alternatives { with or without SS) would you choose in order to stimulate the economy? Explain. .5p!s<

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