Vanessa's Utility Function Is , Where C₁ Is Her

question 7

Multiple Choice

Vanessa's utility function is , where c₁ is her consumption in period 1 and c₂ is her consumption in period 2. In period 2, her income is 4 times 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) 0.10
• B) 0
• C) 0.30
• D) 0.80
• E) 0.20

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Definitions:

Closed Body Positions

Nonverbal cues involving crossed arms or legs that can signal defensiveness or a lack of openness.

Leaning Back

A physical posture or metaphorical stance denoting relaxation, disengagement, or contemplation, depending on context.

Arms Crossed

A body language gesture often interpreted as being defensive, closed off, or uncomfortable.

Bias-free Language

Language that avoids prejudice, discrimination, or stereotypes, ensuring inclusivity and respect towards all individuals regardless of their background or identity.