The mark on the horizontal axis on GRAPH ONE indicates output in period one (Y1) plus wealth (W). The ray from the origin indicates points at which consumption for earners in period one (now, horizontal axis) is equal to consumption for the same people in retirement (future, period two, vertical axis). GRAPH ONE B+ = (x+z) Yt Yt = Cyoung + Clearners + Cretired + It 1+rt Yt = (1+gy) Y(t-1) Cretired = (1+rt-1) *B(t-1) - xYt Cearners = Yt - (1+ rt-1)*B(t-1) - Bt Cyoung = Bt - xYt 1. Suppose earners set consumption in period one equal to their future consumption. That is, the consumption values are indicated by the intersection of the budget line and the ray from the origin.Label the graph clearly and completely to show the amount (output plus wealth): a) paid by period 1 earners to period 1 retirees b) loaned by period 1 earners to period 1 young c) received by period 2 retirees from period 2 earners d) transferred by period 2 retirees to period 3 young Consider an alternative scenario. When these earners were young (in period zero), they were inspired by a lower interest rate (lower than depicted on GRAPH ONE) to invest more in their earning potential. In the 00\"\" equation, x and Br are increased. Thus, as earners (period one) they had more debt to repay (i.e., more debt than in question #1). Also, the young in periods one and beyond follow the example of higher borrowing. Despite these changes, earners' consumption is set equal to their future consumption (i.e., the point is along the ray). 2. On the same GRAPH ONE, add clear and complete labels to show the alternative scenario. Specically, I) the new intertemporal budget line and Y1 plus W and the amount (output plus wealth): 2) paid by period 1 earners to period 1 retirees 3) loaned by period 1 earners to period 1 young 4) received by period 2 retirees from period 2 earners 5) transferred by period 2 retirees to period 3 young Questions 1 and 2 must be on the same GRAPH ONE worth 30 points. The aggregate supply curve and aggregate demand curve Jr=3re+y(YY')+p Y=6Jr have parameter values: 7 = 0.05, 5 = 286, (I) = 12, and YP = 250. Assume that when curves shift, the slopes never change. In each year, expected ination is updated to equal last year's ination. Exogenous changes are permanent. This economy is in long-run equilibrium in year zero. In year one, potential output, 1'", rises to 275