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

Multiple Choice

In the two-period model, suppose a household's income in the first period is $40,000, income in the second period is $50,000, and the real interest rate is 25 percent.What is the maximum amount that the household would be able to spend in the first period?

A) $40,000
B) $50,000
C) $80,000
D) $100,000