Suppose That the Interest Rate Paid to Savers Increases

question 4

Multiple Choice

Suppose that the interest rate paid to savers increases.As a result,Tom wishes to save more.This suggests that,for Tom,

• A) the substitution effect is greater than the income effect.
• B) the income effect is greater than the substitution effect.
• C) utility maximization is not occurring.
• D) future consumption is a luxury.

---

Definitions:

Goals

Goals are specific, measurable, achievable, relevant, and time-bound objectives that individuals or organizations aim to accomplish.

Environmental Conditions

The physical and social factors that surround the workplace and can affect an employee's health, well-being, and productivity.

Stress

The physical or emotional response to external pressures or demands, often resulting in feelings of tension, anxiety, or strain.

Fear

An emotional response to perceived dangers or threats, which can influence attitudes and behaviors.