alleryStart learning →According to the source, at least in the short run, how does the elasticity of savings with respect to the interest rate typically appear?
AFairly elastic
BPerfectly elastic
CExactly unit elastic
DFairly inelastic
Answer & Solution
Correct answer: D. Fairly inelastic
1. Elasticity of savings measures how responsive the quantity of savings is to a change in the interest rate.
2. The evidence on this elasticity is described as controversial overall.
3. But at least in the short run, it appears fairly inelastic.
4. A perfectly elastic or exactly unit elastic value would be a much more precise claim than the source actually makes.
_Source: OpenStax Principles of Microeconomics for AP Courses (CC BY 4.0), Ch 5 "Elasticity", section 5.4 | Elasticity in Areas Other Than Price_
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