The Hatfields and the McCoys Both Earn $50,000 Per Year

Multiple Choice

The Hatfields and the McCoys both earn $50,000 per year in real terms in the labor market, and both families are able to earn a 5 percent real interest rate on their savings. In the year 2010, both families began to save. The Hatfields saved 8 percent of their income each year; the McCoys saved 10 percent. In 2010, the Hatfields consumed ________ more than the McCoys; in 2011, the Hatfields consumed ________ than the McCoys.

A) $1,000; about $960 less
B) $2,000; about $960 more
C) $1,000; about $960 more
D) $2,000; about $960 less