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There are two persons in the economyMr. A and Mr. BMr. A has the following utility function and budget constraintsMax COG7 Subject to Si + Ci = 80 C =1 + rS Mr. B faces the following utility function and budget constraintsCC2 Max S1 + Ci = 10 C= 80+1 + rS1 Subject to aFind out Mr. A's and Mr. B's optimal consumption levels and optimal savings in terms of interest rate rbWho is more likely to be a saverWho is a borrowercPlease determine the interest rate that clears the credit marketcall t r difris 0calculate Mr. A's and Mr. B's savingsCan the credit market clear under r a07 eWhen r = rhow much Mr. A and Mr. B save individually

2. There are two persons in the economy, Mr. A and Mr. B. Mr. A has the following utility function and budget constraints: Max 6,03C07 Subject to Si +C= 80 C2 = (1+r)S: Mr. B faces the following utility function and budget constraints: Max C,*C,02 Subject to S; + C = 10 C2 = 80 + (1+r)S a) Find out Mr. A's and Mr. B's optimal consumption levels and optimal savings in terms of interest rater. b) Who is more likely to be a saver ? Who is a borrower? c) Please determine the interest rate that clears the credit market (call it r"). d) Ifr is 0, calculate Mr. A's and Mr. B's savings. Can the credit market clear under r=0? e) When r=r', how much Mr. A and Mr. B save individually ? 2. There are two persons in the economy, Mr. A and Mr. B. Mr. A has the following utility function and budget constraints: Max 6,03C07 Subject to Si +C= 80 C2 = (1+r)S: Mr. B faces the following utility function and budget constraints: Max C,*C,02 Subject to S; + C = 10 C2 = 80 + (1+r)S a) Find out Mr. A's and Mr. B's optimal consumption levels and optimal savings in terms of interest rater. b) Who is more likely to be a saver ? Who is a borrower? c) Please determine the interest rate that clears the credit market (call it r"). d) Ifr is 0, calculate Mr. A's and Mr. B's savings. Can the credit market clear under r=0? e) When r=r', how much Mr. A and Mr. B save individually

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