Suppose That Molly Had an Income of $500 in Period

question 23

Multiple Choice

Suppose that Molly had an income of $500 in period 1 and an income of $250 in period 2.Suppose that her utility function were c^a₁c^1-a₂, where a = 0.60 and the interest rate were 25%.If her income in period 1 doubled and her income in period 2 stayed the same, her consumption in period 1 would

• A)double.
• B)increase by $300.
• C)increase by $150.
• D)stay constant.
• E)increase by $500.

---

Definitions:

Thrust Sheets

Large scales of rock that have been moved over one another by compressive forces during tectonic movements, often resulting in folded and faulted landforms.

Zagros Mountains

A mountain range in Iran, characterized by its rich history of geological activity including orogeny and seismic activity.

Persian Gulf

A shallow arm of the Arabian Sea between Iran and the Arabian peninsula, known for its extensive oil reserves.

Island Arcs

Chains of volcanic islands that form along subduction zones where one oceanic plate subducts beneath another.