Suppose That Molly from Problem 2 Had an Income of $400

Multiple Choice

Suppose that Molly from Problem 2 had an income of $400 in period 1 and an income of $690 in period 2. Suppose that her utility function were c^a₁c^1-a₂, where a = 0.80 and the interest rate were 15%. If her income in period 1 doubled and her income in period 2 stayed the same, her consumption in period 1 would

A) stay constant.
B) increase by $320.
C) increase by $160.
D) double.
E) increase by $400.