An entrepreneur with current income of $200,000 believes that her future income will either fall to $100,000 or rise to $300,000 with equal probabilities. Her rate of time preference is exactly offset by the interest rate. In the first of two periods,she spends $178,000 and saves $22,000 for the second period. Her behavior illustrates

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The Answer of An entrepreneur with current income of $200,000 believes that her future income will either fall to $100,000 or rise to $300,000 with equal probabilities. Her rate of time preference is exactly offset by the interest rate. In the first of two periods,she spends $178,000 and saves $22,000 for the second period. Her behavior illustrates

An Entrepreneur with Current Income of $200,000 Believes That Her