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28 March, 17:39

Future Generations. Some economists say that economic growth involves a trade-off between current generations and future generations. If a current generation raises its saving rate, what does it sacrifice?

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  1. 28 March, 18:04
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    The correct answer is: present consumption.

    Explanation:

    In economic theory, the savings rate within a society is determined by the choice between present consumption and future consumption. The Two - Period consumption model suggests that an individual, in order to maximise his or her level of utility, displays a consumption behavior that is subject to current and expected levels of income and is constrained by real interest rate.

    The exchange of present consumption for future consumption is called saving.
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