An increase in the supply of savings increases savings and reduces the interest rate.

Name: An increase in the supply of savings increases savings and reduces the interest rate.
Brand: Quizplus
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Question

Quizplus · Accepted Answer

When there is an increase in the supply of savings, the amount of savings available in the market increases. This leads to a decrease in demand for savings. To attract more borrowers, the lenders reduce the interest rate. Hence, an increase in the supply of savings leads to a reduction in the interest rate.

An Increase in the Supply of Savings Increases Savings and Reduces