The supply curve for savings indicates that the higher the interest rate,the:
A) larger the quantity saved.
B) smaller the quantity saved.
C) larger the saver's income.
D) smaller the saver's income.

Question

Quizplus · Accepted Answer

The higher the interest rate, the more attractive it becomes for people to save their money because they can earn a higher return. This leads to an increase in the quantity of savings, resulting in a positively sloped supply curve for savings. Therefore, as the interest rate increases, the quantity saved also increases.

The Supply Curve for Savings Indicates That the Higher the Interest