Use the two-period model for this question. Assume an economy with 1000 consumers. 500 are of typ A and 500 are of type B. Every consumer has the same endowments (y1, y2) = (50,60) and faces the same taxes (T1, T2) = (10,20). The only difference between typ A and type B is that they differ in patience (so they differ in their preferences). Specifically, second period optimal consumption for consumer of typ A is given bycA2= 60 and that of type B bycB2= 20. The real interest rate isr= 8%.

1. (5pts) Determine each consumer's current consumption and current saving. Explain your steps carefully.
2. (5pts) Determine aggregate private saving, aggregate consumption in each period, government spending in the current and future periods, the current- period government deficit, and the quantity of debt issued by the govern- ment in the current period. Explain your steps carefully.
3. (10pts) Suppose that current taxes increase to 15 for each consumer. Re- peat parts a. and b. and explain your results.