Question

Which of the following statements is true of the Industrial Revolution?

A. It was a gradual process.

B. It was a period of rapid disruption.

C. It started in the United States.

D. It started in the capital goods industry.

Which of the following statements is true?

A. Higher interest rates typically encourage more savings.

B. Savings of households are independent of tax rates.

C. Households that expect an increase in future earnings are likely to save more.

D. An increase in the consumption of households increases savings of the households.

Which of the following statements is true?

A. If households expect higher taxes in the future, they will increase their current savings rate.

B. If households expect higher taxes in the future, they will decrease their current savings rate.

C. The savings rate of households is dependent only on current consumption expenditure.

D. The savings rate of households is dependent only on consumption expenditure planned for the future.

Answer 1

1. The correct answer is that industrial revolution was a gradual process. This is because the developments occurred eventually over the years.

The other options are incorrect becausr Industrial revolution started in England and it was a period where major breakthroughs were witnessed in all the sectors.

2. The correct answer is that higher saving rates typically encourage more savings. This is because interest rate typically acts as a reward for saving. Higher interest would means higher amount of reward. This will encourage saving.

The other options are incorrect because savings of households very much depend on the tax structure of the country. A like rise in future wealh will discourage people from savings. This is because we generally save for future. When future is already secure, why not consume more today. Increase in comsumptiom will lead to decrease in savings. Because disposable income= Consumption + Savings.

3. The correct answer is (A) more tax rate in future will encourage savings. This is because more taxes in the future would mean lesser resources in the future. The households will try to compensate for that by saving more now so that they have enough resources in the future.

The above explanation also says why option B is incorrect.

Also, options C and D are incorrect because saving rate is dependent on the current expenditure. However, it is not the only factor influencing it. Other factors like wealth, taxes, members of family etc. Also come into play.  Same line of reasoning  is true for option D.