Mary lives for two periods. In the first period she gets a real wage 𝑌1 of £5,000 and in the second period a real wage 𝑌2 of £6,000. She knows with certainty what her second–period wage will be and obeys her intertemporal borrowing constraint.
Question 2 [15 marks] Mary lives for two periods. In the first period she gets a real wage 𝑌1 of £5,000 and in the…