In Irving Fisher's two-period consumption model, if Y₁ = 20,000, Y₂ = 15,000, and the interest rate r is 0.50 (50 percent), then the maximum possible consumption in period one is: A) 20,000. B) 25,000. C) 30,000. D) 35,000.

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The maximum possible consumption in period one occurs when all future income is consumed in the present. With an interest rate of 50%, the future income of 15,000 can be converted to present value by dividing by 1.5, giving 10,000. Adding this to the current income of 20,000 gives a maximum consumption of 30,000 in period one.

In Irving Fisher's Two-Period Consumption Model, If Y1 = 20,000

In Irving Fisher's Two-Period Consumption Model, If Y₁ = 20,000