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Please help! Part 2. As seen above, a shock to housing wealth can affect the future, but it can also have immediate effects if people

Please help!

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Part 2. As seen above, a shock to housing wealth can affect the future, but it can also have immediate effects if people are counting on wealth in the future, as we saw in the Great Recession. Suppose an individual follows the Fisher 2-period model with the following utility function and incomes U(c1, C2) = 0.5In(c1) +0.5In(cz) Y1 = 200 Y2 = 100 + W Where W is the wealth an individual has accumulated in their home. This seems reasonable if, for example, an individual plans to sell their home and downsize when they retire. () Solve for c, in terms of W. If there is a housing price shock at the beginning of period 1, and the housing value drops, what happens to c, and total economic output in period 1? (5 points)

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