Urgent

1. Consider a two period scenaiio. An individual earns $300 in period 1 and $100 in period 2. The individual can freely save of borrow against future income between the periods. The interest rate on saving and bairowing is 5%. The individual utility function In 132 1+?- period 2 and r is the interest rate. is: 11(01. e2): 111c1+ where :1 is consumption in period 1 (:2 is consumption in a) Suppose an income tax of 7% is imposed on the individual 1n both periods. The taxis imposed on earnings in a given period but exempts income om interest on savings. Calculate the present value of tax revenue in this scenario. (2 marks). How much income will individual save or borrow between periods? (3 mraks)