Consider a two-period consumption allocation problem as seen in class. For simplicity, assume that the discount rate and the interest rate r are both equal to zero. The household maximizes U=u(C(0))+u(C(1)) subject to its intertemporal budget constraint, which is now extended to include lump-sum taxes T(0) and T(1) in both periods. (a) Derive the reaction of the household's consumption in the first period with respect to an increase in taxes. Distinguish the two cases in which the households either believes that the tax increase is temporary (taxes increase only in the first period) and the case in which the tax increase is assumed to be permanent (taxes increase in the first period and will remain high in the future).