Ask Question
BusinessBusiness
16 January, 05:43

If saving exceeds investment demand, and consumption is not a function of the interest rate: a. the demand for loans exceeds the supply of loans. b. the interest rate will rise. c. saving will fall. d. the interest rate will fall.

+2
Answers (2)
  1. 16 January, 06:34
    0
    The correct answer is letter "D": the interest rate will fall.

    Explanation:

    If in a certain economy savings are greater than investments, the interest rate will fall. This is the result of individuals' reduced needs to request loans whether for consumption or investment. The situation is reinforced if consumption is not a factor for changes in the interest rate. Banks will be pushed to lower the interest rate to promote borrowings, thus, reducing the savings gradually.
  2. 16 January, 08:26
    0
    d. the interest rate will fall.

    Explanation:

    If the number of people that save money is more than the number of people that demand for investment, then production rate will reduce, and if investment demand is more than savings, production will increase. And if there is an increase in interest rate, consumption rate will fall because spending on consumption will be more expensive and consumer will prefer to save for higher interest rate.

    Therefore in situations where there is an increase in saving and the interest rate does not affect the consumption rate, there will be a fall in the interest rate.
Know the Answer?
Not Sure About the Answer?
Find an answer to your question ✅ “If saving exceeds investment demand, and consumption is not a function of the interest rate: a. the demand for loans exceeds the supply of ...” in 📘 Business if you're in doubt about the correctness of the answers or there's no answer, then try to use the smart search and find answers to the similar questions.
Search for Other Answers
You Might be Interested in
Who files one of the 1040 series of tax forms? A. Self employed people B. Corporations C. People who are unemployed D. Individuals who are not self-employed
Answers (2)
Private property ownership and some government regulation of the economy are basic characteristics of which economic system?
Answers (1)
Which of the following statements about enzymes is true a. they are carbohydrates b. they are stable at high temperatures c. they are biological catalysts d. they are not reuseable e. they are required in large amounts in order to be effective?
Answers (1)
The more management relies on formal, collective, sequential, fixed, and serial socialization programs and emphasize divestiture, the more likely newcomers' differences will be stripped away and replaced by standardized predictable behaviors. 1.
Answers (1)
Dr. Patton is a professor of English. Recently she counted the number of misspelled words in a group of student essays.
Answers (1)
New Questions in Business
Using technological tools to craft reports and proposals a. reduces the mechanical work involved in developing long reports and proposals. b. eliminates the need for the writer to do any work. c.
Answers (1)
Short term goal can be defined as: A.) a goal that can be accomplished right away B.) a goal that challenges the Brian C.) a goal that can be completed within one year D.) an important task that can be put off until later
Answers (2)
What does "monetary policy" mean? A. Federal Reserve policies on creating new banks B. political policies pursued by the federal government C. actions the Federal Reserve takes to influence the economy D.
Answers (1)
What is the meaning of market in economics
Answers (1)
If you were a police officer, at night during your shift, you confront a suspicious man walking in an elite neighborhood. You stop to question the man, but he refuses even to give you his name.
Answers (1)
Home » Business » If saving exceeds investment demand, and consumption is not a function of the interest rate: a. the demand for loans exceeds the supply of loans. b. the interest rate will rise. c. saving will fall. d. the interest rate will fall.
Sign Up Forgot Password?