Suppose That the Interest Rate Paid to Savers Increases

question 93

Multiple Choice

Suppose that the interest rate paid to savers increases.As a result,Tom wishes to save less.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.

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Definitions:

Goal-Oriented Rewards

Incentives provided after the achievement of defined objectives, aimed at motivating performance.

Top-Down Goals

Objectives set by top-level management that are expected to be followed through the hierarchy to guide the actions and functions of an organization.

Hygiene Factors

Elements of the work environment, such as salary, company policies, and working conditions, that can prevent dissatisfaction but do not necessarily lead to increased satisfaction.

Herzberg's Two-Factor Theory

A theory suggesting that employee satisfaction and motivation are influenced by two groups of factors: hygiene factors and motivators.