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Question 2 Frank works as a cousultant. His income when young is $4000 {period 1) and $16000 when old [period 2}. The interest rate is r=]U%. a} In...

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Question 2 Frank works as a cousultant. His income when young is $4000 {period 1) and $16000 when old [period 2}. The interest rate is r=]Ufl%.a} In a. graph, depict Frank’s budget. set. Mark all the bundlea on the budget linethat involve saving and the ones that involve borrowing. Find analytically PV andW of income and Show it in the graph. [3 marks}b) Frank‘s intmmnpornl preferences are given by U(01,02:l W incl 1- fling-3 I where the discount parameter {5 = 100% Find the optimal consumption plan {01,03} and how much Eran}: berm-s 0r saves. [5 marks] c] In Frank manning his consumption? {2 marks]
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