The rates of return that households expect on their savings are determined by ________.

Question

Quizplus · Accepted Answer

The rates of return that households expect on their savings are primarily determined by interest rates. Higher interest rates generally lead to higher return expectations, while lower interest rates lead to lower return expectations. Tax rates, exchange rates, and the level of government expenditure may also have some impact on return expectations, but their effects are generally secondary to the influence of interest rates.

The Rates of Return That Households Expect on Their Savings