Other Things Being Equal, a Higher Saving Rate

question 71

Multiple Choice

Other things being equal, a higher saving rate

• A) leads to higher interest rates.
• B) means higher standards of living in the future.
• C) means higher standards of living today.
• D) is associated with a decline in the rate of growth of the population.

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Definitions:

Price-Earnings Ratio

A valuation metric for stocks, calculated by dividing the market price per share by the earnings per share.

Market Price

The present rate at which a service or asset is available for purchase or sale on the public market.

Dividends

Payments made by a corporation to its shareholder members, typically derived from profits.

Common Stock

A form of corporate equity ownership, a type of security that represents a fraction of ownership in a corporation, giving holders voting rights and a share in the company’s profits.