Learning Path
Question & Answer1
Understand Question2
Review Options3
Learn Explanation4
Explore TopicChoose the Best Answer
A
Interest rates tend to rise
B
Interest rates tend to fall
C
Interest rates remain unchanged
D
Interest rates fluctuate randomly
Understanding the Answer
Let's break down why this is correct
Answer
When people save more money, there is more money available for banks to lend. This increase in savings means that banks have more funds to offer loans, which can lead to lower interest rates. Lower interest rates make it cheaper for people and businesses to borrow money, encouraging them to spend and invest. For example, if a family saves more and puts it in the bank, the bank can lower the interest rate on a home loan, making it easier for that family to buy a house. Overall, increased savings can help lower interest rates, stimulating economic growth.
Detailed Explanation
When people save more money, there is more money available for banks to lend. Other options are incorrect because Some might think that more savings means banks can charge more; It's a common belief that savings don't change rates.
Key Concepts
risk assessment
Topic
Impact of Savings on Interest Rates
Difficulty
easy level question
Cognitive Level
understand
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