Saving Is

question 149

Multiple Choice

Saving is

• A) the sum of the funds people hold in their checking accounts.
• B) after-tax income that is not spent on consumption.
• C) always equal to consumption.
• D) equal to disposable income plus consumption.

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Definitions:

Default Risk Premium

The additional yield that investors require to invest in bonds that have a risk of default, compared to risk-free bonds.

Liquidity Risk Premium

The extra yield or return that investors demand for holding a security that may not be easily sold or converted into cash without a significant loss in value.

Maturity Risk Premium

The additional yield demanded by investors as compensation for the increased risk of holding a bond as it approaches its maturity date.

Inflation Rate

The rate at which the general level of prices for goods and services is rising, and, subsequently, the purchasing power of currency is falling.