A decrease in the real interest rate will likely lead to A. An inefficient use of...
A decrease in the real interest rate will likely lead to
A.
An inefficient use of resources available for present and future consumption.
B.
Less future consumption in favor of present consumption.
C.
An outward shift in the intertemporal production possibility frontier.
D.
Less present consumption in favor of future consumption.
Homework Answers
option B
Lower discount rate will discourage the individuals to save for future as the interest that could be earned from savings is now lower . Instead borrowing from future becomes a cheaper option so individuals will increase their consumption in the present and reduce their future consumption .
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A decrease in the real interest rate will likely lead to
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