Question: Consider two alternatives to prepare for retirement:
(1) saving in a bank where your funds earn interest, and
(2) buying fi ne art that rises in value over time. Each grows your retirement account over time.
a. If the rates of return on fi ne art purchases fall, how would you expect the allocation of retirement funds to change across the macro economy?
b. If the national savings rate is based only on the first option (saving in a bank), then what happens to the national savings rate when the allocation of retirement funds shifts as you describe in your response to part (a)?