A consumer is making saving plans for this year and the next. She knows her real income after taxes will be €20,000 in both years. Any part of her income saved this year will earn a real interest rate of 3% between this year and next year. Currently, the consumer has no wealth (no money in the bank or other financial assets, and no debts). There is no uncertainty about the future.

The consumer wants to save an amount this year that will allow her to

(1) make college tuition payments next year equal to €5000 in real terms; 
(2) enjoy exactly the same amount of consumption this year and next year, not counting tuition payments as part of next year’s consumption; and

(3) have neither assets nor debts at the end of next year.

a. How much should the consumer save this year? 
    How much should she consume?

an employer offers his or her employee the option of shifting x units of income from next yesr to this year. that is, the option to reduce income next year by x units and increase income this year by x units.

1. calculate the lifetime wealth of the consumer when the employee accepts the offer and when he or she does not.

2. determine, using a diagram, how this shift in income will affect current consumption, future consumption and savings. distinguish between borrowers and lenders.

A consumer's income in the current period is y1= 170 and income in the future period is y2 = 150. He pays lump-sum taxes t1 = 20 in the current period and t2 = 7 in the future period. The real interest rate is 10% every period. Suppose that current and future consumption are perfect complements for the consumer and he wants to have equal consumption in the current and future periods. Determine the consumer's optimal consumption bundle (C1, C2). 

A consumer’s income in the current period is y1= 170 and income in the future period is y2 = 150. He pays lump-sum taxes t1 = 20 in the current period and t2 = 7 in the future period. The real interest rate is 10% every period.Suppose that current and future consumption are perfect complements for the consumer and he wants to have equal consumption in the current and future periods. Determine the consumer’s optimal consumption bundle (C1, C2). Is he a saver or a borrower?