ECONOMICS
SAVING AND INVESTING
|
Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
|
|
|
Low interest rates decrease the incentive to save.
|
|
|
A savings account is best for meeting short-term goals.
|
|
|
It is better to wait until interest rates are high to start saving.
|
|
|
Investing tends to have a higher risk than savings, resulting in potentially higher rates of return.
|
Detailed explanation-1: -While the money sitting in your account doesn’t decrease, its spending power does if the interest earned is lower than inflation. So, unless your savings are earning interest above 5.4%, they are losing value in real terms as you’ll be able to buy less with that money.
Detailed explanation-2: -You can earn interest by putting money in a savings account, but savings accounts generally earn a lower return than investments.
Detailed explanation-3: -The investor is losing money if the inflation rate exceeds the interest earned on a savings or checking account. The Consumer Price Index (CPI) is the most popular way to measure inflation in the United States.
Detailed explanation-4: -Answer and Explanation: C) Protections against inflation is not a benefit of a savings account.