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3. You have $10 to spend, and need to spend it over the next two periods. Suppose your preferences are given by exponential discounting, hedonic

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3. You have $10 to spend, and need to spend it over the next two periods. Suppose your preferences are given by exponential discounting, hedonic utility is u(x) = x1/2 discount rate is o = 0.9, and interest rate is r = 0.05. What is the optimal consumption (and savings) for you to undertake. If r were to increase in this particular case, how would you change your consumption in period 1

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