Hi, please list out the formulas where necessary , graphs where necessary , if the question doesnt require it, its fine not have it but please do put it down if it helps you to explain . If the answer is provided, its because I struggled to understand the answer, please dont just reproduce it, but rather explain it and list out the formulas used with explanations OF FORMULAS USED IN THE QUESTION , the procedure etc.Thank you!

Q20. A consumer lives for two periods. His subjective discount rate and the real interest rate are both 5%. (a) What is the relation between consumption in the two periods? 11' (Ct) From the rst order condition \"(GHQ/(1+0) = 1 + r we see thatif r = p, consumption must be constant over time. (b) Use the lifetime budget constraint to calculate consumption as a function of incomes in the two periods. C _ Y_2. . _ Y1+Y2/1.05 _ 1.05Y1+Y2 _ 1.05 1 C + 1+r _ Y1 + 1+r1mplles C _ 1+1/1.05 _ 1.05+1 _ 2.05 Y1 + 2.05 Y2 (c) What will consumption be if incomes in both periods are 500? C = 500 (d) How much will consumption increase if income in the rst period increases by 100? Explain the result. _ 1.05 4Y1 _ 2.05 the increase in income. as 0.51; Consumption will increase by 51 units, which is slightly more than half (e) How much will consumption increase if income in the second period increases by 100? Explain the result. AC 1 F = E z 0.49; Consumption will increase by 49 units which is slightly less than half the 2 . increase in income. A future increase in income is worth less because it is discounted