Consider a consumer facing the inter-temporal consumption problem studied in class in which there are two periods. The consumer earns m in period 1 and m in period 2. The consumer has well-behaved preferences and can borrow or lend in the first period at interest rate r. At the initial interest rate the consumer was a borrower. Following an increase in the interest rate, which statement is always true?

a) The consumer cannot be made better off

b) The consumer will remain a borrower.

c) The consumer could move to a higher indifference curve following the rate rise, but only if they become a lender

d) None of the above.