Question: Hello, I need the answer to this question please. Question II [35 points] Assume the representative consumer lives in two periods and his preferences can
Hello, I need the answer to this question please.

Question II [35 points] Assume the representative consumer lives in two periods and his preferences can be described by a U(c,d) = (2/5 + 8(d)2/5, where c is the current consumption, c is next period consumption, and 8 = 0.90. Let's assume that the consumer can borrow or lend at the interest rate r = 10%. The consumer receives an income y = 100 in the current period and y' = 150 in the next period. The government wants to spend G = 40 in the current period and G' = 50 in the future period. 1. If the government sets t = 50, what will be the consumer's estimate of the value of t'? [03 points] 2. Is it optimal for the consumer to consume his disposable income in each period? [03 points] 3. Solve the consumer's problem by finding the optimal allocations c* and c'*. [05 points] 4. Is the consumer a borrower or a lender? [02 points] 5. Is the economy at the equilibrium? Explain. [04 points] 6. What are the equilibrium values of c and c? [04 points] 7. What is the equilibrium interest rate? [03 points] 8. How will the equilibrium interest rate respond to a decrease in G? [03 points] 9. How will the equilibrium interest rate respond to a decrease in G"? [03 points]
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