When We Consider Our Savings, Interest Rates _________ and Inflation

question 64

Multiple Choice

When we consider our savings, interest rates _________ and inflation rates ___________ the value.

• A) increase; decrease
• B) decrease; increase
• C) increase; increase
• D) have no real effect; decrease

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Definitions:

Disposable Income

Post-tax funds households can use for expenditure and savings.

Induced Consumption

Consumer spending that is influenced by changes in income levels, as opposed to spending that is not influenced by such changes.

Disposable Income

The funds that are available to households for saving and spending activities after the deduction of income taxes.

Induced Consumption

The portion of consumer spending that increases with an increase in disposable income, implying that as people earn more, they tend to spend more.