If Fred were to consume $1,050 1 year from now, he would consider this as good as spending $1,000 today.He would consider $1,628.89 of consumption 10 years into the future equivalent to $1,000 of consumption today.If the interest rate is 5%, Fred preferences

A) are consistent with exponential discounting.
B) are consistent with hyperbolic discounting.
C) are consistent with geometric discounting.
D) are inconsistent.
E) violate the Weak Axiom of Revealed Preference.

Fred's preferences are consistent with exponential discounting because the value of future consumption discounted back to the present aligns with a constant rate of discounting over time. For example, $1,050 in one year being equivalent to $1,000 today implies a 5% interest rate ($1,000 * 1.05 = $1,050), and $1,628.89 in ten years being equivalent to $1,000 today also aligns with a 5% annual discount rate compounded over ten years ($1,000 * (1.05)^10 ≈ $1,628.89). This demonstrates a consistent rate of time preference, characteristic of exponential discounting.