Higher Savings Usually Requires Higher Interest Rates Because

question 42

Multiple Choice

Higher savings usually requires higher interest rates because:

• A)Everyone prefers to save more instead of consuming
• B)Saving requires sacrifice and people must be compensated for this sacrifice
• C)Higher savings means we expect interest rates to decrease
• D)Of the rule of 72

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Definitions:

IRR

Internal Rate of Return represents a financial measure for assessing the potential profitability of investments.

Marginal Cost

The cost added by producing one additional unit of a product or service.

Average Total Cost

Calculated as the total cost of production (fixed plus variable costs) divided by the total output, indicating the average cost per unit produced.