1 P J Is Trying To Decide How Much To Consume In Time Periods 1 And 2 C C2 He Will 3298493

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(1) P.J. is trying to decide how much to consume in time periods 1 and 2, (c, c2). He will get $100 in period 1 and $100 in period 2 . He can save and borrow as much as he wants between the two time periods at an interest rate of 20%. If PJ.’s utility function is U(G, ??) = c1c2, what level of consumption does he choose in period 2 if the inflation rate is also 10%? Assume that pi-Si. 9 (a) 100 (b) 140 (c) 180 (d) 80 (e) None of the above

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