Suppose a person's life is divided into two main blocks, periods I and 2, The consumer desires to perfectly smooth consumption over the two periods, setting e =ca - c'. Income in the two periods is equal to 1/1 = 12 = 500, and the-proportional tax rates are f - to - 0.5. The real interest rate r is 100%, This person is born with no wealth. (a) What is the present value of lifetime resources (PVLR)? What is the highest feasible consumption in the current period? What is the highest feasible consumption in the future period? (b) Find the optimal consumption in each period (c" ) and the amount of saving/ borrowing s. Comment on your findings. (e) What happens to the consumption choices if r drops to 0%7 Compute the new value of c' and the amount of saving/borrowing $1. Explain the economic mechanisms at play. (d) Use the parameter values considered in part (a) above. However, now assume that in the first period the government is giving this household a transfer, equal to tri - 100 (while try - 0). Find the optimal consumption in each period (e') and the amount of saving/borrowing #1