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Holly's Utility Function Is , Where C1 Is Her

Question 9

Multiple Choice

Holly's utility function is Holly's utility function is , where c<sub>1</sub> is her consumption in period 1 and c<sub>2</sub> is her consumption in period 2. In period 2, her income is twice as large as her income in period 1. At what interest rate will she choose to consume the same amount in period 2 as in period 1? (Choose the closest answer.) A) 0.30 B) 0.08 C) 0.23 D) 0 E) 0.15 , where c1 is her consumption in period 1 and c2 is her consumption in period 2. In period 2, her income is twice as large as her income in period 1. At what interest rate will she choose to consume the same amount in period 2 as in period 1? (Choose the closest answer.)


A) 0.30
B) 0.08
C) 0.23
D) 0
E) 0.15

Correct Answer:

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