When examining the impact of changes in the interest rate on saving, which of the following is true?
A)higher interest rates may make saving more attractive
B)higher interest rates allow individuals to save less each year to reach their retirement saving goal
C)empirical evidence does not suggest that interest rate changes significantly affect saving
D)all of the above
E)none of the above

Question

Quizplus · Accepted Answer

All of the statements are true regarding the impact of changes in the interest rate on saving. Higher interest rates can make saving more attractive because individuals earn more on their savings. They also allow individuals to save less each year to reach a specific savings goal due to the higher amount of interest earned. Despite these logical implications, empirical evidence often shows that changes in interest rates do not significantly affect saving behavior, possibly due to other overriding factors such as income levels, consumption needs, or economic conditions.

When Examining the Impact of Changes in the Interest Rate