Question

A change in interest rates would shift the consumption schedule and the saving schedule ______; a change in taxes would shift these two schedules ______.

Answer 1

Answer:

The change in interest rate will affect the consumption and saving in oppositte ways.

An increase in the interest rate makes spend money now more expensive while makes saving much better. So one goes up (savings) while another down(consumption)

The opposite is true is the rates decline. People will spend as it is cheap and savings decline.

While a tax, as it directly cuts a portion of income, it will make both decrease when up and increase when down. As less or more disposable income is available

Resuming savings and consumption has oppositve relaionship with interest rate

but same relationship with taxes

Explanation: