1. Assume that the Ricardian Equivalence Principle does not hold for the consumer. What are the effects of an increase in the lump-sum tax imposed on current income (i.e., an increase in T) on optimal current consumption and private saving (i.e., c*and s*), holding other factors constant? Similarly, what if the lump-sum tax decreased? What will happen to consumption and private savings? 2. What if the Ricardian Equivalence Principle does hold? what will happen to consumption and private savings if lump-sum tax increase? what if lump-sum tax decrease?.