Which of the following statements is true?
A) Savings of households are independent of tax rates.
B) Higher interest rates typically encourage more savings.
C) An increase in the consumption of households increases savings of the households.
D) Households that expect an increase in future earnings are likely to save more.
B
You might also like to view...
Explain what happens to inflation during the business cycle. Give an intuitive explanation as to why inflation changes the way it does over the business cycle
What will be an ideal response?
Which of the following individuals would be most negatively affected by anticipated inflation?
A) a student who borrows $10,000 at a nominal interest rate of 5% to finance educational expenses B) a full-time employee at a pizza parlor who makes more than the minimum wage C) a retired railroad engineer who receives a fixed income payment every month D) a union contractor whose pay is adjusted based on changes in the CPI