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

Question

Quizplus · Accepted Answer

Saving requires people to sacrifice current consumption and forego current enjoyment in order to save for future needs or investments. In order to motivate people to save, they must be compensated with higher interest rates that provide a return on their savings. Therefore, higher savings usually requires higher interest rates.

Higher Savings Usually Requires Higher Interest Rates Because