For each of the following events, consider how you might react. What things might you consume more or less of? Would you work more or less? Would you increase or decrease your savings? Are your responses consistent with the topic of chapter 6?
Interest rates rise dramatically, and savings accounts are now paying 10% interest annually.
A new business opens up near you offering part-time jobs at $20 an hour.
Case, Karl E., Fair, Ray C., and Oster, Sharon. Principles of Microeconomics. 11th Edition. Prentice Hall ISBN- 978-0-133-02416-6
Answer -
1 - If the rate of interest increases , it will be beneficial to save as we will get more interest .
Investment will be more costly now ,because more interest has to be given for the loans taken for investment.
Hence the saving will increase and the investment will decrease.
2 - If the new business will hire the partime jobs , people will start working more. They will like to work and earn something in their free time. Hence they will work more.
For each of the following events, consider how you might react. What things might you consume...