The rate of interest that people will be willing to pay:
A)is independent of their personal rate of time preference (impatience).
B)will increase as they come to assign more importance to distant events relative to events in the near future.
C)depends primarily upon their present plans for consumption.
D)will be higher the more attractive are the current opportunities they perceive relative to future opportunities.

Question

Quizplus · Accepted Answer

The rate of interest that people are willing to pay will be higher the more attractive they perceive current opportunities relative to future opportunities. This is because individuals are more likely to prioritize immediate consumption over future consumption when they believe that current opportunities are more attractive than future ones. The other answer choices are not accurate - the rate of interest people are willing to pay is typically influenced by their personal rate of time preference (impatience) and their present plans for consumption, but to a lesser extent than the perceived attractiveness of current versus future opportunities.

The Rate of Interest That People Will Be Willing to Pay