Question 2a [10 Marks]: Regarding the two-period model with asymmetrical information, suppose an economy with 10 consumers who all receive 100 income in the first period and 120 in the second. 5 are lenders and follow the first utility function. 5 are borrowers and follow the second utility function. U1=c0.2c0.8U2=c0.6c0.4 1 borrower decides not to repay the loan. The financial intermediary cannot discern who will not repay but it can anticipate the share of bad borrowers and it can increase the interest rate to mitigate the risks. The lenders interest rate is 0.2. The government taxes all consumers 10 units in the first period and the 12 units in the second. Calculate the current aggregate consumption in this setting. Demonstrate your steps. Question 2a [10 Marks]: Regarding the two-period model with asymmetrical information, suppose an economy with 10 consumers who all receive 100 income in the first period and 120 in the second. 5 are lenders and follow the first utility function. 5 are borrowers and follow the second utility function. U1=c0.2c0.8U2=c0.6c0.4 1 borrower decides not to repay the loan. The financial intermediary cannot discern who will not repay but it can anticipate the share of bad borrowers and it can increase the interest rate to mitigate the risks. The lenders interest rate is 0.2. The government taxes all consumers 10 units in the first period and the 12 units in the second. Calculate the current aggregate consumption in this setting. Demonstrate your steps