"Interest Is the Reward for Saving

question 169

Essay

"Interest is the reward for saving." Or,alternatively,"interest is the opportunity cost of consumption." Explain how these two statements are equivalent.

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Definitions:

Current Account

Part of the balance of payments of a country, including transactions in goods, services, primary income, and secondary income.

Financial Account

A component of a country's balance of payments that records transactions involving domestic and foreign financial assets and liabilities.

Remittances

Money transferred by foreign workers to individuals in their home country, contributing to the economy through support of family and investment in local businesses.

Workers

Individuals engaged in any form of employment, contributing labor to produce goods or services.