Question: If there is a decrease in interest rates, what will happen for households that are net savers in the economy? They will decrease current consumption

If there is a decrease in interest rates, what will happen for households that are net savers in the economy?

They will decrease current consumption if the substitution effect is greater than the income effect. They will experience no change in current savings if the substitution effect is greater than the income effect. They will increase current savings if the substitution effect is greater than the income effect. They will increase current savings if the income effect is greater than the substitution effect. They will increase current consumption if the income effect is greater than the substitution effect.

Step by Step Solution

★★★★★

3.42 Rating (146 Votes )

There are 3 Steps involved in it

1 Expert Approved Answer

Step: 1 Unlock

If there is a decrease in interest rates households that are net savers in the economy are likely to ... View full answer

Question Has Been Solved by an Expert!

Get step-by-step solutions from verified subject matter experts

Step: 2 Unlock

Step: 3 Unlock

Students Have Also Explored These Related Economics Questions!

Prevosti Farms and Sugarhouse pays its employees according to their job classification. The following employees make up Sugarhouse's staff: Employee Number Name and Address Payroll information...

Calculate the fully loaded labor costs for members of your project team using the following data. Who is the most expensive member of your team? What proportion of the overall fully loaded cost of...

Planning is one of the most important management functions in any business. A front office managers first step in planning should involve determine the departments goals. Planning also includes...

Managing Scope Changes Case Study Scope changes on a project can occur regardless of how well the project is planned or executed. Scope changes can be the result of something that was omitted during...

If there is a decrease in interest rates, what will happen for households that are net savers in the economy? They will increase current savings if the substitution effect is greater than the income...

Help solve this....ONLY ANSWER WITH EXPLANATION will be accepted 5. Which of the following is included in the 8. Which of the following workers is most likely to investment component of real gross...

MACROECONOMICS (TEXTBOOK USED IS ECONOMICS FOR SOUTH AFRICAN STUDENTS FIFTH EDITION PHILIP MOHR AND ASSOCIATES) To round off this section, we illustrate the benefits of an FIGURE 19-6 An increase in...

MACROECONOMICS To round off this section, we illustrate the benefits of an FIGURE 19-6 An increase in productivity without any increase in remuneration increase in productivity without any...

Each question should be well explained 13. Which of the following would represent an injection into the circular flow of income and AS 3 expenditure? PRICE LEVEL (A) Investment spending AS (B) Income...

What causes fluctuations in the economy's output of goods and services in the short run? Shifts in aggregate supply Shifts in aggregate demand Changes in long-term growth rates Changes in the labor...

Macroeconomics questions provide short understandable answers please 6. (10) Consider the discrete time monetary-search model we saw in class. As in the baseline model, in the day time trade takes...

7.Under what circumstances does a single-market analysis of tax incidence give a good approximation of the multimarket incidence?

Calculate charged and uncharged ration of weak acid and weak base drug under normal and basic urine pH. What is the effect of urine alkalinization on drug absorption/elimination? What will be the...

assessment: ST 1 1 5 Final Exam All of the above tion an employee comes into contact with blood and body fuids when cleaning instruments, which combination of steps is most Change gioves after all...

Most teens wish their parents had stronger controls. They know too much phone time is unhealthy, but they cant find a socially acceptable way to break away. Do you agree? Why or why not?

In your experience, does living in an edited world establish unrealistic expectations, which may lead to depression and a sense of failure? Give one example to support your answer.

What does the following statement do? whille ((m=getw(fl))!=EOF) printf("%5d",m);

Discontinuities: identify and classify R(x) = [ (6 + x- x^2) / (x^2 - 7x + 12)]

Joe and Jill will be retiring soon and would like to buy a lake house for cash. They estimate that they will need $229,000 to buy the house. If they can earn 6% on their money over the next three...

The return of goods to the supplier will affect the purchase account. Question 27Answer True False

In 2018 New Zealand rewrote the charter of its central bank to include high employment as well as low inflation as its goals. Why would New Zealand want to do this?

Go to the website for the Federal Reserve Board of Governors (www.federalreserve.gov) and download the most recent monetary policy press release of the Federal Open Market Committee (FOMC), the body...

Consider the following statement: A deficit during a war can be a good thing. First, the deficit is temporary, so after the war is over, the government can go right back to its old level of spending...

6.34. In a CNN exit poll of 1336 voters in the 2006 Senatorial election in New York State, let jc = number in exit poll who voted for the Democratic candidate, Hillary Clinton. (a) Explain why this...

6.39. A study considered the effects of a special class designed to improve children's verbal skills. Each child took a verbal skills test before and after attendingtheclassforthree weeks. Lety =...

6.18. The previous exercise analyzed whether astrologers could predictthe correct personality chart for a given horoscope better than by random guessing. In the words ofthat study, what would be a...