The rate of exchange between future consumption and current consumption is
A) the nominal risk-free rate.
B) the coefficient of investment exchange.
C) the pure rate of interest.
D) the consumption/investment paradigm.
E) the expected rate of return.

Question

Quizplus · Accepted Answer

The rate of exchange between future consumption and current consumption is measured by the pure rate of interest. It reflects the opportunity cost of current consumption - in other words, the return that must be offered to compensate individuals for foregoing current consumption and instead saving and investing that money for future consumption.

The Rate of Exchange Between Future Consumption and Current Consumption