If the Real Interest Rate on Saving Accounts Increases from 3

question 241

Multiple Choice

If the real interest rate on saving accounts increases from 3% to 5%,all other things being equal,

• A) business investment spending for new capital increases.
• B) business investment spending for new capital remains unchanged.
• C) people are less willing to save.
• D) people are more willing to save.
• E) the amount people save remains unchanged.

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Definitions:

Family Businesses

Businesses owned and operated by multiple family members, often passed down from one generation to the next.

Shareholders

Individuals or entities that own share(s) of stock in a corporation, thus holding a portion of the ownership and rights to profits.

Disadvantages

are the unfavorable or negative aspects of a situation, plan, or condition that may cause difficulties or reduce chances of success.

Life Cycle

The series of changes in the life of an organism, including birth, growth, reproduction, and death; it can also refer to similar stages in the development of products or organizations.