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Continue using the same environment for this question: Sheila lives for two periods. She earns $100 in the first period and $110 in the second
Continue using the same environment for this question: Sheila lives for two periods. She earns $100 in the first period and $110 in the second period. She wants to consume exactly the same amount in both periods. The interest rate at which she can save and borrow is 10%. There is no inflation.
Now suppose that Sheilas first-period income goes up by 5%. What is her marginal propensity to consume? Provide your answer as a decimal number, not a percentage, and approximate it to three decimal places
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