MrOBKandle Has a Utility Function C₁c₂, Where C₁ Is His

question 9

Multiple Choice

Mr.O.B.Kandle has a utility function c₁c₂, where c₁ is his consumption in period 1 and c₂ is his consumption in period 2.He has no income in period 2.If he had an income of $70,000 in period 1 and the interest rate increased from 10 to 16%,

• A)his savings would increase by 6% and his consumption in period 2 would also increase.
• B)his consumption in both periods would decrease.
• C)his savings would not change but his consumption in period 2 would increase by 2,100.
• D)his consumption in both periods would increase.
• E)his consumption in period 1 would decrease by 16% and his consumption in period 2 would also decrease.