Question

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.

Answer 1

Answer:

D. Less present consumption in favor of future consumption.

Explanation:

A real interest rate is the interest rate which is used for adjusting for remobing the impacts of inflation to get reflect the actual funds cost and the actual yield to the lender or to the investor

In the case when there is a reduction in the real interest rate so the current consumption would be lower in favour of the future consumption

Therefore the option D is correct