B1. Suppose individuals expect an increase in future taxes. Explain what effect this expectedincrease in future taxes will have on the yield curve and on stock prices in the current period.B2. When interpreting bond prices as present values, discuss what factors determine the price of a two-year discount bond. Include in your answer an explanation of how changes in each of these factors affects the price of a two-year discount bond.B3. Suppose firms expect future output to be higher and future interest rates to be higher. Given this information, how will firms alter investment in the current period? Explain.B4. Explain how expectations affect consumption.