Ch. 17 and 18: Households and Workers

Interest rates rise. How is this likely to affect household savings and expenditure?

• Savings: rise

  Expenditures: rise

• Savings: rise

  Expenditures: fall

• Savings: fall

  Expenditures: fall

• Savings: fall

  Expenditures: rise

What is most likely to cause a rise in expenditure in an economy?

• A more uneven distribution of income

• A rise in income tax

• A rise in confidence

• A reduction in wealth

What can cause a fall in saving?

• A rise in disposable income

• A fall in the rate of interest

• A rise in the range of financial institutions

• A fall in the rate of tax imposed on earnings from saving

What must be occurring, if consumption is less than disposable income?

• Saving

• Income is being redistributed to the poor

• Borrowing

• Income levels are falling

Which of the following is an opportunity cost of saving?

• buying a burger later

• spending now

• you have more money in the bank

• investing the money later

Explain 2 reasons why young workers may save less than middle-aged workers

• because they may be earning less

• because they may not want money but just freedom

• because they tend to try new things out, which makes them spend more

• because they try to hide their deep feelings and emotions about society's concerns

What could be reasons why households will borrow less? Select all that apply.

• increased interest rates

• decreased interest rates

• reduced confidence about the economy's performance

• they are optimistic that they can pay

What can be an effect of increased interest rates on banks?

• banks can be reluctant to lend as people might not be able to pay back

• banks will confidently keep lending without end

• banks will stop accepting deposits so they don't have to pay additional on the savings

• commercial banks will all keep their money in the Central Bank

What's the tendency of people when their incomes increase?

• Save more

• Spend more

• Spend all

• Save all

Which of the following shows pattern of spending between the rich and the poor? Select all that apply.

• Poor: tend to spend more on needs

  Rich: tend to spend more on luxuries and quality products

• Poor: tend to spend all their earnings

  Rich: tend to spend just a fraction of their earnings

• Poor: tend to spend a lot on education of their kids than food

  Rich: tend to spend more on necessities than luxuries

• Poor: tend to spend less on needs and more on blings

  Rich: tend to spend more on cheap products to save a lot