Question

The supply of savings is positively sloped because: firms borrow more when interest rates are low. people are enticed to forgo consumption when interest rates are higher. higher interest rates cause people to save less. when people have more incomes they save more.

Answer 1

Answer:

people are enticed to forgo consumption when interest rates are higher

Explanation:

The interest rate describes how much borrowers need to pay for loans and the reward that lenders receive on their savings. When the relative demand for loanable funds increases, the interest rate goes up. When the relative supply of loanable funds increases, the interest rate declines

Therefore, The savings curve is upward sloping, because,high interest rates increase the future returns that households obtain from their savings and high interest rates increase the opportunity cost of consuming today so that people save more to smooth their consumption.

Answer 2

Answer:

people are enticed to forgo consumption when interest rates are higher.

Explanation:

Whenever interest rates are rising or falling, you commonly hear about the federal funds rate. ... Because higher interest rates mean higher borrowing costs, people will eventually start spending less. The demand for goods and services will then drop, which will cause inflation to fall.

Interest rate levels are a factor of the supply and demand of credit: an increase in the demand for money or credit will raise interest rates, while a decrease in the demand for credit will decrease them. ... And as the supply of credit increases, the price of borrowing (interest) decreases.