Questions 1-7 please

0 Assume a young agents utility function is given by: 1 2 U(CZJ,Cf+1)= gian+1an+p (1) The budget constraints when young and when old are given by; M (1+w)C'+' = W. Pl M; o __ 0 Where w is a consumption tax on young agents. 1. What is the consumer's intertemporal budget constraint? my, assuming that at each point in 2. Write down the resource constraint for this econo time there are N young agents and N old agents along with a government sector that consumes G units of the consumption good at each point in time. 3. In words compare and contrast the resource constraint for the economy and the con sumer's lifetime budget constraint. nstraint. In this model, how is government spending 4. Derive the government budget c0 nanced? 5. From the consumer's maximization problem, in terms of the exogenous variables. Explai explain what the rst order necessary conditions imply. 6. Assume W9 = 2,000, W0 = 400, 3 = 100. (a) Suppose government spending is nanced solely by a cons (i.e., 91} 1/20?) solve for the steady state values for Rt, 0?, 2+1, and Uw. (b) Suppose government spending is nanced solely by an ination tax, (i.e., 9:} = S(Rt) S(Rt_1)Rt_1) solve for the steady state values for Rt, 0?, 0&1, and U. solve for each of the endogenous variables 11 the intuition behind the solutions, also, umption tax on old agents, 7. Draw a picture of the above 2 results on a single diagram and explain intuitively why the utility is higher under one particular taxing scheme compared to the other (your intuition must be in terms of the burden of taxation and how \"distortionary\" the tax is