Suppose an individual has a fixed amount of wealth to allocate between consumption in two periods (cS1U1B11S1U1B0 and cS1U1B12S1U1B0).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: I.cS1U1B11S1U1B0 increases.
II)cS1U1B11S1U1B0 decreases.
III)cS1U1B12S1U1B0 increases.
IV)cS1U1B12S1U1B0 decreases.
Which of these is consistent with the hypothesis that both cS1U1B11S1U1B0 and cS1U1B12S1U1B0 are normal goods?

I,II and III,but not IV.

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