When an increase in interest rate leads to a decline in savings, it implies that:?

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With reference to interest rates, which one of the following is not correct ?
Posted by:
Muhammad
10-August-2014

A. individuals substitute future consumption for present consumption.

B. income effect of a higher interest rate is greater than substitution effect..

C. savings and interest rate patterns cannot be determined in terms of the income and substitution effect.

Project Finance Accounting Cash Flow Forecasting Financial Systems Feasibility Studies

Question added by Shahbaz Hayder , Group Head of Finance , Sharif Group of Companies
Date Posted: 2015/07/08

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3 Answers

by Anoop Mohan , Finance Manager , Arafa plywoods

Option B.................... .

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by Shazia Anees , Assistant Manager Finance , Arham Trading Company

OPTION B==============================

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by Zehab Osman , Accountant , Aldar Consultancy Co.

C----------------------------------------------------

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