Problem
1. What does theory tell us about how the value of stocks held by consumers should be related to consumption behavior? Does the data support this?
2. What are the effects of an increase in the real interest rate on consumption in each period, and on savings? How does this depend on income and substitution effects and whether the consumer is a borrower or lender?
The response should include a reference list. Double-space, using Times New Roman 12 pnt font, one-inch margins, and APA style of writing and citations.