Question: how do i solve this Consider a two-period model1 inhabited by two individuals1 Anna and Bob for as they like to he called... A? and

how do i solve this

 how do i solve this Consider a two-period model1 inhabited by

Consider a two-period model1 inhabited by two individuals1 Anna and Bob for as they like to he called... A? and E}. A has the following preferences means\" as =1nicto+ cameo. while B has the following preferences 19(an at} = belief} + 0.81:4ch Consumer A receives an income YEA = l in period I] and YIA = 150 in period L On the other side, Consumer E receives an income YDB = 125 in period 1'] and FIB = llltl in period 1. Assume the interest rate is r. The government wants to spend Ga = 5|] in period 0 and G1 = 75 in period 1. These spendiugs are nanced through lump-sum taxes. It is assumed that the government collects the necessary tax to nance its spending in each period and the tax burden is equally supported by the consumers in each period. 1. Compute the optimal consumption [cmclj for each individual as a function of the interest rate r. [12 points] 2. Find the equilibrium interest rate that clears the credit market. [US points]

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