What Effects Does a Higher Rate of Return Have on Saving

question 7

Multiple Choice

What effects does a higher rate of return have on saving?

• A) A higher rate of return has an income effect that discourages saving and a substitution effect that encourages saving.
• B) A higher rate of return has an income effect that encourages saving and a substitution effect that discourages saving.
• C) A higher rate of return has income and substitution effects that both decrease saving.
• D) A higher rate of return has income and substitution effects that both increase saving.

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Definitions:

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Health-Care Professional

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