A higher real rate of interest _____ the reward for saving and _____ the amount people need to save to reach a given target.
A) increases; increases
B) decreases; decreases
C) increases; decreases
D) decreases; increases

Question

Quizplus · Accepted Answer

If interest rates are high, then the reward for savings is higher. This means that people will have to save less to each a certain wealth target compared to a situation with lower interest rates.

A Higher Real Rate of Interest _____ the Reward for Saving