In the Two-Period Model, Suppose a Household's Income in the First

question 40

Multiple Choice

In the two-period model, suppose a household's income in the first period is $30,000, income in the second period is $60,000, and the real interest rate is 30 percent.What is the household's maximum spending in the second period, if it decides to save the entire amount in the first period?

• A)$40,000
• B)$50,000
• C)$80,000
• D)$99,000