The consumer's budget constraint reflects the fact that because interest is earned on savings:
A) future income is worth less than current income.
B) future income is worth more than current income.
C) future consumption costs more than current consumption.
D) future consumption is worth more than future income.

Question

Quizplus · Accepted Answer

Future income is worth less than current income because interest is earned on savings, which means that the value of money increases over time.

The Consumer's Budget Constraint Reflects the Fact That Because Interest