An economy's upward- sloping supply curve of desired saving is usually plotted with on the vertical axis.

Question

Quizplus · Accepted Answer

The supply curve of desired saving represents the amount of saving that households and firms are willing to undertake at different interest rates. Therefore, the vertical axis represents the interest rate, which is the cost of holding savings. As the interest rate increases, it becomes more expensive to save, and the quantity of saving decreases. Similarly, as the interest rate decreases, it becomes cheaper to save, and the quantity of saving increases. Therefore, the supply curve of desired saving is upward-sloping, indicating a positive relationship between the interest rate and the quantity of saving.

An Economy's Upward- Sloping Supply Curve of Desired Saving Is