A higher interest rate makes:
A)current consumption and future leisure more expensive.
B)current consumption cheaper and future. leisure more expensive.
C)current consumption and future leisure cheaper.
D)current consumption more expensive and future leisure cheaper.

Question

Quizplus · Accepted Answer

A higher interest rate means that borrowing money becomes more expensive, which makes current consumption more expensive. At the same time, saving becomes more attractive due to higher returns, which makes future leisure (as a result of delaying consumption) cheaper.

A Higher Interest Rate Makes