As real interest rates increase, other things equal, the net present value of education is likely to

Question

Quizplus · Accepted Answer

When real interest rates increase, the opportunity cost of spending money on education increases as well. This makes the net present value of education, which is the difference between the future earnings potential from education and the cost of education, decrease. In extreme cases, it could even become negative, meaning that the cost of education exceeds the future earnings potential.

As Real Interest Rates Increase, Other Things Equal, the Net