Patience Has a Utility Function U(c₁, C₂)=c^1/2₁

question 11

Multiple Choice

Patience has a utility function U(c₁, c₂) =c^1/2₁ + .087c^1/2₂, 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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Fastest Growing

A term often used to describe entities or economies that increase in size, value, or importance at a very rapid pace.

Trade Deficit

A condition where a nation's expenditures on imports surpass its earnings from exports, leading to a deficit in the trade balance.

Merchandise Trade Deficit

The situation that occurs when a country imports more goods than it exports, leading to a negative balance of trade.

Merchandise Trade

The act of buying, selling, or exchanging goods and commodities across domestic or international borders.