Please provide a detailed answer with reasoning for the question (all parts: (a), (b) and (c)). Thank you.

The neoclassical consumption model provides us with a theory on how households optimally decide their consumption and saving every period. These decisions have implications also on wealth accumulation and inequality. In recent decades income and consumption inequality rose signicantly in the United States and in many European countries. We can use the neoclassical consumption model framework to study the implications of consumption decisions for inequality. (8.) Assume that a substantial part of the rise in inequality is due to the rising returns to education, so that more highly educated workers are permanently richer than less edu- cated workers. According to the neoclassical consumption model, what would happen to consumption inequality? Motivate your answer. (b) Assume instead that there is a rise in inequality due to an increase in the frequency and magnitude of temporary shocks (i.e. unemployment). What would happen to consumption inequality in this case? Motivate your answer. Now assume that the government fears the economy might be entering a recession. Therefore. it decides to cut income taxes today in an attempt to mitigate the recessionary effects. ((2) How will consumption react? What will change if some households face a borrowing- constraint