In Irving Fisher's Two-Period Consumption Model, If Y₁ = 15,000

question 27

Multiple Choice

In Irving Fisher's two-period consumption model, if Y₁ = 15,000, Y₂ = 20,000, the interest rate r is 0.50 (50 percent) , and there is a constraint on borrowing that is binding, then C₂ equals:

• A) 20,000.
• B) 22,500.
• C) 35,000.
• D) 42,500.

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