If the Real Interest Rate on Savings Accounts Decreases from 5

question 74

Multiple Choice

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

• A) business investment spending for new capital decreases.
• 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 will save remains unchanged.

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Definitions:

Downsizing

The process of reducing the size of a company's workforce to improve its efficiency and reduce costs, often leading to layoffs.