Other things being equal, a higher saving rate
A) leads to higher interest rates.
B) means higher standards of living in the future.
C) means higher standards of living today.
D) is associated with a decline in the rate of growth of the population.

Question

Quizplus · Accepted Answer

A higher saving rate means that there is more investment in productive capital, which can lead to higher economic growth in the future. This can result in higher standards of living in the future. Option A is incorrect because higher interest rates result from higher demand for borrowing, not saving. Option C is incorrect because saving less today may lead to higher consumption today, but lower consumption and standards of living in the future. Option D is incorrect because the rate of growth of the population is not related to saving rates.

Other Things Being Equal, a Higher Saving Rate