At an 8% interest rate,the quantity of savings is $250 billion.What would the quantity of savings be if the interest rate falls to 5%?
A) $190 billion
B) $250 billion
C) $300 billion
D) $500 billion

Question

Quizplus · Accepted Answer

We can use the simple interest formula to solve this problem:

Simple Interest = (Principal x Rate x Time) / 100

Let's assume that the time period for both interest rates is the same, say, one year.

At 8% interest rate, with a principal of $250 billion, the simple interest would be:

(250 x 8 x 1) / 100 = $20 billion

Therefore, the total amount of savings after one year would be:

Principal + Simple Interest = 250 + 20 = $270 billion

Now, if the interest rate falls to 5%, but the principal and time period remain the same, the simple interest would be:

(250 x 5 x 1) / 100 = $12.5 billion

Thus, the total amount of savings after one year at 5% interest rate would be:

Principal + Simple Interest = 250 + 12.5 = $262.5 billion

Hence, the answer is A) $190 billion, as it is not among the options given and is thus incorrect.

At an 8% Interest Rate,the Quantity of Savings Is $250