Lucy lives in a nice neighbourhood in a riskless, two-period, Fisher-type economy. This is what we know about her situation.

The interest rate: r = 3.9 per cent

Endowment: e = ($240,000, $106,400)

Utility function: u(C0, C2)= -exp(-alphaC0)-exp(-alphaC1), where alpha= 31/10000000,

Investment opportunity schedule: 1= C0^2/a^2 + C1^2/b^2, a=250,000 b=380,000.

Fill in the table and draw a graph, as well-labelled as practical, showing the Fisher Separation results. Explain it using plain language. Also draw a second graph showing Lucys demand for current consumption as a function of the interest rate.

SHOW WORK PLEASE

EXERCISES Lucy lives in a nice neighbourhood in a riskless, two-period, Fisher-type economy. This is what we know about her situation. The interest rate: r=3.9 per cent Endowment: =($240,000,$106,400) Utility function: u(C0,C1)=exp(C0)exp(C1), where =10,000,00031 Investment opportunity schedule: 1=a2C02+b2C12,a=250,000,b=380,000 Fill in the table and draw a graph, as well-labelled as practical, showing the Fisher Separation results. Explain it using plain language. Also draw a second graph showing Lucy's demand for current consumption as a function of the interest rate. EXERCISES Lucy lives in a nice neighbourhood in a riskless, two-period, Fisher-type economy. This is what we know about her situation. The interest rate: r=3.9 per cent Endowment: =($240,000,$106,400) Utility function: u(C0,C1)=exp(C0)exp(C1), where =10,000,00031 Investment opportunity schedule: 1=a2C02+b2C12,a=250,000,b=380,000 Fill in the table and draw a graph, as well-labelled as practical, showing the Fisher Separation results. Explain it using plain language. Also draw a second graph showing Lucy's demand for current consumption as a function of the interest rate