Suppose That Molly Had an Income of $400 in Period

Multiple Choice

Suppose that Molly 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.