As wealth increases in the economy, savers are willing to
A)hold more cash relative to their holdings of bonds.
B)buy fewer bonds at any given price.
C)buy more bonds at any given price.
D)lend less at any given interest rate.

Question

Quizplus · Accepted Answer

As wealth increases in the economy, savers have more disposable income to invest. Therefore, they are willing to buy more bonds at any given price. This is because buying more bonds enables them to earn more interest income and potentially increase their overall return on investment. As such, the demand for bonds increases, which may lead to higher bond prices and lower yields.

As Wealth Increases in the Economy, Savers Are Willing to