Question: onsider a utility function given by u(ct) = ln(ct) + ln(ct+1) (1) where = 1 1 + (2) and the constraints are given by yt

onsider a utility function given by u(ct) = ln(ct) + ln(ct+1) (1) where = 1 1 + (2) and the constraints are given by yt = ct + st (3) yt+1 + (1 + r)st = ct+1 (4) (a) (10 points) Combine the two constraints by eliminating st. (b) (10 points) Solve the constraint for ct+1 (c) (10 points) Plug the constraint into ct+1 in the utility function.

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