Question

Indicate the correct term to each description of a financing agent, activity, setting, or instrument.

Answer 1

Answer:

Indication of correct terms:

a. The reward a saver expects on loaned funds:  3. Interest rate

b. The cost a borrower pays for loaned funds:  3. Interest rate

c. The -difference between the real interest rate and the nominal interest rate:  1. Inflation rate

d. The percentage of disposable income that is kept as personal savings:  2. Saving rate

e. The term that indicates most people need to be incentivized to save:  4.Time preference

f. The result consumption exceeding income over a particular period: 5. Dissaving

Explanation:

1. Inflation rate is the ratio of the change in the prices of goods when compared with an indexed figure.

2. Saving rate is the ratio of savings kept behind from disposable income earned.  It shows the ratio of income not consumed when earned.

3. Interest rate is the ratio of the amount that is saved or loaned out that people would receive in order to incentivize them to save or lend and prefer the same amount today and in future.

4. Time preference is a term that shows that people value an amount of money today more than they value the same amount received in future.  So, they would rather spend that amount today than spending it tomorrow.

5. Dissaving is spending more than income and even tapping into or consuming from the savings account.