When considering household saving,the relative price between consuming when young and consuming when old is the
A) consumption rate.
B) interest rate that individuals can earn on their private savings.
C) prime rate.
D) federal funds rate.

Question

Quizplus · Accepted Answer

The interest rate that individuals can earn on their private savings determines the relative price between consuming when young and consuming when old. A higher interest rate makes it more attractive to save for the future and consume less when young, while a lower interest rate may encourage individuals to consume more and save less, which can impact their ability to maintain their desired standard of living in old age.

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