CFA Practice Question

There are 136 practice questions for this study session.

CFA Practice Question

The willingness of investors to substitute future wealth for current consumption is ______ related to the change in real GDP growth.

A. positively
B. inversely
C. not
Correct Answer: B

User Contributed Comments 4

User Comment
thebkr777 Anyone can explain more? I'm getting confused somehow
akirchner1 I'll give this a try...The CFA book states that the risk free rate is positively correlated with real GDP growth. So if you have extra money on hand and you consume it on goods, you don't have that money to invest in the risk free rate. If anyone else has a better explanation, feel free to comment.
jjenkins7 As GDP grows, people spend more.
As GDP decreases, people save more.
tkn07 If economy is expected to do well, people are less worried about future so they will save less and consume more.
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