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Pats2010 Pats2010
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6 months ago

Abigail has a high rate of time preference while Cynthia has a low rate of time preference. If the interest rate payable on savings accounts increases from 5 percent to 7 percent, then



▸

Abigail would find it easier than Cynthia to cut back on consumption and increase her savings.



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Cynthia would find it easier than Abigail to cut back on consumption and increase her savings.



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neither Abigail nor Cynthia would decrease her consumption and increase her savings because relative time preferences have little to do with the interest rate.



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Abigail and Cynthia would probably decrease their consumption and increase their savings by the same amount because the higher interest rate will affect them both to the same degree regardless of their time preferences.

Textbook 
Economics

Economics


Edition: 12th
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yolinessyoliness
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6 months ago
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Pats2010 Author
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6 months ago
Good timing, thanks!
54321abs
wrote...

Yesterday
I appreciate what you did here, answered it right Smiling Face with Open Mouth
54321abs
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2 hours ago
Thanks
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