Patience Has a Utility Function U(c₁, C₂) , Where

question 6

Multiple Choice

Patience has a utility function U(c₁, c₂) , where c₁ is her consumption in period 1 and c₂ is her consumption in period 2. Her income in period 1 is 5 times as large as her income in period 2. At what interest rate will she choose to consume the same amount in period 1 as in period 2?

• A) 0.75
• B) 0
• C) 0.08
• D) 0.15
• E) 0.23

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