Hi, I need help solving this problem please. The interest rate change mentioned in the problem is from 8% to 12%. ( r0 = 0.08 and r1 = r2 = 0.12 ) Thank you for your time.

5. Use TABLE THREE to show the effects of the higher real interest rate in period two on each cohort's consumption. Since you are indicating only the effects of the higher real interest rate in period two, what happens to the real interest rate in subsequent periods is irrelevant. Recall that growth of investment, wealth, and output is exogenous (thus, unaffected). lower (d), higher (0), not different (ND), or not enough information (??). Let ci refer to consumption by cohort i in period t, where i is y (young), e (earners), or r (retired). TABLE ONE czy cz C2 C39 cz C49 C4 04 c5 c5 cs 5. Use TABLE THREE to show the effects of the higher real interest rate in period two on each cohort's consumption. Since you are indicating only the effects of the higher real interest rate in period two, what happens to the real interest rate in subsequent periods is irrelevant. Recall that growth of investment, wealth, and output is exogenous (thus, unaffected). lower (d), higher (0), not different (ND), or not enough information (??). Let ci refer to consumption by cohort i in period t, where i is y (young), e (earners), or r (retired). TABLE ONE czy cz C2 C39 cz C49 C4 04 c5 c5 cs