Question $2$ Consider a consumer in the two$-$period model. Initially, this consumer chooses a

bundle with current $($period $1)$ consumption c$0$ and future $($period $2)$ consumption c$0.$ Assume

initially this consumer is a saver, and as such s $>0.$

a$.$ Depict this situation in a graph

b$.$ Assume now that the level of current$-$period taxes the consumer has to pay increases.

What will happen to the levels of current and future consumption and savings of this

consumer? Show graphically and explain intuitively.

c$.$ Assume now that relative to the initial situation, the interest rate increases. What will

happen to the levels of current and future consumption and savings of this consumer?

Show graphically and explain intuitively.

PLEASE DRAW ALL THE GRAPHS