Riley income in period 1 (current) is $100,000. His income in period 2 (future) will be $110,000. The interest rate is 20%. At that interest rate, Riley chooses to consume $85,000 in period 1.

a. How much will Riley be able to consume in period 2

b. If the interest rate increases to 22%, is Riley better, worse, or indifferent? Explain answer using diagrams