Define savings rate. If the aggregate savings in an economy is $10,000 and the aggregate income in the economy is $70,000, what is the savings rate in the economy?
What will be an ideal response?
The savings rate refers to the fraction of income that households save. It can be obtained by dividing aggregate savings by aggregate income.
In this case, the savings rate = 10,000/70,000 = 0.1428 = 14.28%.
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A change in the price level ________ the AE curve and ________ the AD curve
A) results in a movement along; shifts B) shifts; results in a movement along C) shifts; shifts D) has no effect on; results in a movement along E) results in a movement along; results in a movement along
When Audrina raised the price of her homemade cookies, her total revenue increased. This suggests that the demand for Audrina's cookies is elastic
Indicate whether the statement is true or false
Suppose Jack and Kate are at the town fair and are choosing which game to play. The first game has a bag with four marbles in it-1 red marble and 3 blue ones. The player draws one marble from the bag; if it is red, they win $20 and if it is blue, they win $1. The second game has a bag with 10 marbles in it-1 red, 4 blue, and 5 green. The player draws one marble from the bag; if it is red, they win $20; if it is blue, they win $5; and if it is green, they win $1. Both games cost $5 to play. Kate decides to play the second game. Kate's expected value of payoff is:
A. $5.00. B. $5.75. C. $4.50. D. $4.00.
If the economy is falling below potential real GDP, which of the following would be an appropriate fiscal policy to bring the economy back to long-run aggregate supply? An increase in
A) the money supply and a decrease in interest rates. B) government purchases. C) oil prices. D) taxes.