As wealth increases in the economy, savers are willing to
A)hold more cash relative to their holdings of bonds.
B)buy fewer bonds at any given price.
C)lend more at any given interest rate.
D)lend less at any given interest rate.

Question

Quizplus · Accepted Answer

As wealth increases, savers tend to have more disposable income and hence are more willing to lend or invest at any given interest rate. This leads to an increase in the supply of loanable funds in the economy, causing the interest rate to fall. Therefore, savers will lend more at any given interest rate.

As Wealth Increases in the Economy, Savers Are Willing to