5. Recall the 2-period consumption-borrowing model with imperfect information between borrowers and lenders, where we have the following assumptions: Consumer lives for 2 periods; endowment in period 1 and 2 are y and y' respectively, and pays taxes t and t' in period 1 and 2 respectively. Consume c today and c' tomorrow . Assume that lenders can lend at a lower interest rate than the one faced by borrowers; lend at r₁, borrow at ₂:₂ >r, 2 r : spread arises for compensating the bank for costs of making loans; information asymmetries Start at a consumption point were a consumer is facing a borrowing constraint, and as such consumes their initial endowment. Now suppose that there is a drop in taxes today. Show graphically what happens to the utility of this person before and after the tax decrease. zha 5