Suppose Y0=1000,Y1=800, and r=5%. If this individual consumes C0=900 in the period 0 , what is her consumption C1 in the period 1 ? Hints: - You were given the equation above that represented an intertemporal budget constraint, in which the present value of consumer expenditures must equal the present value of income in the two periods: - C0+C1/(1+r)=Y0+Y1(1+1) - Now you are being asked to take this equation and solve for C1 - You have been given the rest of the variables: - C0=900 - Y0=1000 - Y1=800 - r=0.05 - Once you plug in the numbers for these variables, the equation look like this: - 900+C1(1+0.05)=1000+800/(1+0.05) - Now solve for C1