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EconomicsQ&A LibraryHelena earns $2000 this year and will earn $1500 the next year. The interest rate between each year is 10%. She wants to consume the same quantity each year. She wants to have spent all her money by the end of year 2. Warning: each question does build on each other How much would she save? How much would she consume? If she wins the lottery during the first year, raising her earnings to $10000 this year, how much would she save, how much would she consume? If she now wants to consume twice as much in year 1 as she does in year 2, how much would she save, how much would she consume?Start your trial now! First week only $4.99!*arrow_forward*

Question

- Helena earns $2000 this year and will earn $1500 the next year. The interest rate between each year is 10%. She wants to consume the same quantity each year. She wants to have spent all her money by the end of year 2.

Warning: each question **does **build on each other

- How much would she save? How much would she consume?
- If she wins the lottery during the first year, raising her earnings to $10000 this year, how much would she save, how much would she consume?
- If she now wants to consume twice as much in year 1 as she does in year 2, how much would she save, how much would she consume?
- If she now has no preferences about her consumption, but she wants to save $5000 in year 1 (to buy a new car in year 2), how much would she consume in year 1 and year2?

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