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Consider a 2-period economy in which Y; = A[K;. The households start with a quantity a > 0 of initial assets and maximize lifetime utility
Consider a 2-period economy in which Y; = A[K;. The households start with a quantity a > 0 of initial assets and maximize lifetime utility given a per-period utility function u(e) = ln(e). Assume that Aj = A = 1 and A2 = 1. What is requal to? Assume that A1 = A=1-A and A2 = 1. What is ri cqual to? Consider a 2-period economy in which Y; = A[K;. The households start with a quantity a > 0 of initial assets and maximize lifetime utility given a per-period utility function u(e) = ln(e). Assume that Aj = A = 1 and A2 = 1. What is requal to? Assume that A1 = A=1-A and A2 = 1. What is ri cqual to
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