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.By how much would the household's maximum spending in the first period increase if income in the second period increased to 60,000?

A) $6,000
B) $8,000
C) $10,000
D) $12,000