Introduction to Economics 1 Deneme Sınavı Sorusu #835244

What can be said for the effect of an increase in interest rates on saving?

It will increase savings

The total effect is ambiguous.

It will decrease savings

It will slightly decrease then increase savings

It will slightly increase then decrease savings

Yanıt Açıklaması:

The effect of an increase in interest rates on saving is ambiguous. An increase in interest rates causes saving to increase due to substitution effect but to decrease due to income effect. Since both effects work in opposite directions, the total effect is ambiguous. The answer is B.

PAYLAŞ:

SORUNUN CEVABI: B

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