Question: Notice that this problem implies two budget constraints 01+S = W 02 = S(1+R) The rst constraint states that wealth is split between consumption in

Notice that this problem implies two budget constraints 01+S = W 02 = S(1+R) The rst constraint states that wealth is split between consumption in period 1 and saving. The second constraint states that consumption in period 2 is given by savings, including the interest earned. Question 4.1 Express 6' from the second equation and use it to substitute S out of the rst equation to obtain

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