When considering household saving,the relative price between "consuming when young" and "consuming when old" is the
A)consumption rate.
B)interest rate.
C)prime rate.
D)federal funds rate.

Question

Quizplus · Accepted Answer

The relative price between "consuming when young" and "consuming when old" is determined by the interest rate. A higher interest rate makes it more attractive to save for future consumption, whereas a lower interest rate makes it more attractive to consume now. Therefore, the interest rate is a key factor to consider when making decisions about household saving.

When Considering Household Saving,the Relative Price Between "Consuming When Young