saving and spending

A person has no outstanding debts.

What might cause that person to save more and spend less from their monthly income?

• a rise in the choice of products

• a rise in income tax

• a rise in interest rates

• a rise in the price of essential products

Which factor is likely to cause an increase in people's savings?

• A. an increase in tax rates

• B an increase in the interest rate

• C. a reduction in economic uncertainty

• D. a reduction in real wages

What is not included in a person's stock of wealth?

• A. a gold watch

• B. annual income

• C. an oil painting

• D.company shares

What will lead to an increase in spending?

• A. an increase in the rate of unemployment

• B. a reduction in the rate of interest

• C. a reduction in expenditure by firms on advertising

• D. an increase in the rate of income tax

A person is most likely to save more when there is an increase in a country's

• A. exchange rate.

• B. inflation rate.

• C. interest rates.

• D. money supply.

What may cause an individual to save a higher proportion of their income?

• A. A belief that the price of goods will rise in the future.

• B. A fall in the rate of interest paid by the country's banks.

• C. A fear that income will fall in the future.

• D. A rise in the individual's wish to enjoy higher consumption immediately

in 2008-2009 the central bank of a developed country reduced interest rates from 5% to 0.5% per year tostimulate the economy.

How would this policy have affected the amount saved and the cost of borrowing by individuals?

• Amount saved: decrease

  Cost of borrowing:

  decrease

• Amount saved: decrease

  Cost of borrowing:

  increase

• Amount saved: increase

  Cost of borrowing:

  decrease

• Amount saved: increase

  Cost of borrowing:

  increase

The table shows information for two workers.

Both workers save 10% of their disposable income. How much is this in each case?

• Doctor: $12,000

  Window cleaner: $40,000

• Doctor: $1200

  Window cleaner: $4000

• Doctor: $40,000

  Window cleaner: $12,000

• Doctor: $4000

  Window cleaner: $1200

Why may a rise in the rate of interest cause some people to save more

• A. They may be saving for a fixed 10 year term.

• B. They may be saving out of habit.

• C. They may be saving to leave as much money as possible to their children.

• D. They may be saving to raise a particular sum of money.

In South Africa, the rate of consumer spending is relatively high compared with other developing countriesHowever, the unemployment rate is high at 25% and only 27% of students complete the 12 years of basiceducation.

As a result, what is also likely to be found in South Africa?

• A. a high average standard of living

• B. a high current rate of savings

• C. a high level of debt among consumers

• D. a high supply of skilled workers