The evidence on the supply curve of financial capital is controversial, but at least in the short run, the elasticity of savings with respect to the interest rate appears to be _______.
A) elastic
B) inelastic
C) perfectly elastic
D) negative

Question

Quizplus · Accepted Answer

In the short run, the elasticity of savings with respect to the interest rate is generally considered to be inelastic. This means that changes in the interest rate have a relatively small effect on the amount of savings. People's savings habits are not highly responsive to changes in interest rates over short periods.

The Evidence on the Supply Curve of Financial Capital Is