Suppose an Individual Has a Fixed Amount of Wealth to Allocate

Suppose an individual has a fixed amount of wealth to allocate between consumption in two periods (C₁ and C₂) .Any funds not spent in period 1 will earn interest (at the rate r) ,which will increase purchasing power in period 2.Consider four possible reactions to an increase in r: Which of these is consistent with the hypothesis that both C₁ and C₂ are normal goods?

A) II and III, but not I and IV.
B) I, II, and IV, but not III.
C) I, III, and IV, but not II.
D) I, II and III, but not IV.