Question: Graphically demonstrate the Fisher separation theorem for the case where an individual ends up lending in financial markets. Label the following points on the graph:

Graphically demonstrate the Fisher separation theorem for the case where an individual ends up lending in financial markets. Label the following points on the graph: initial wealth, W0; optimal production/investment (P0, P1); optimal consumption (C*0 C*1); present value of final wealth, W*0.

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