Suppose an individual has a fixed amount of wealth to allocate between consumption in two periods ( C₁and 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:

I.   C₁ increases.

II.  C₁ decreases.

III. C₂ increases.

IV. C₂ decreases.

Which of these is consistent with the hypothesis that both C₁ and C₂ are normal goods?