In a world of certainty, the interest rate reflects
A) the degree of risk.
B) differing time patterns of individuals' consumption preferences.
C) economic growth.
D) qualifications of borrowers.

Question

Quizplus · Accepted Answer

In a world of certainty, there would be no risk, economic growth rates would be constant, and borrowers would have the same qualifications. Therefore, the only remaining factor influencing interest rates would be the differing time patterns of individuals' consumption preferences, which would affect the demand for and supply of credit.

In a World of Certainty, the Interest Rate Reflects