Final answer:
A rise in the interest rate increases the opportunity cost of consuming today because it incentivizes saving for a higher future return. Conversely, it decreases the opportunity cost of future consumption, as saved funds accumulate more interest over time. These changes are due to the interplay of the substitution effect and the income effect.
Step-by-step explanation:
When there is a rise in the interest rate, it affects the opportunity cost of consumption. The concept that you are asking about falls under the domain of economics and, more specifically, is related to intertemporal choice and the interest rate effect.
Higher interest rates increase the opportunity cost of consuming today because they incentivize saving and postpone consumption in favor of higher future consumption. That's because you'll earn more by saving your money due to the higher interest. Conversely, it decreases the opportunity cost of consuming in the future, as money saved today can grow more due to the higher interest rates. This is known as the substitution effect, which essentially means people are encouraged to consume less now and save for later when the interest rate increases.
However, the same rise in interest rates also has an income effect, where individuals might feel richer because their savings grow faster and could, therefore, decide to increase their consumption now and in the future, assuming they view the additional interest as an increase in their overall wealth.