In our study of inter temporal utility maximization, everything (initial and ending wealth, interest rate, and consumption) in the budget constraint is expressed in real terms. Reformulate the budget constraint in nominal terms and show that for a two-period planning horizon, the inter temporal budget constraint in nominal terms is equivalent to the one in real terms that we studied in class.

c^f = (y+a-c) + y^f

y: current real income

y^f: future real income

a: real wealth at the beginning of current period

r: real interest rate

c: current real consumption( not yet determined)