61 When the interest rate falls people are O less likely to

??61 When the interest rate falls, people are: O less likely to save, that is, demand a financial asset. O more likely to save, that is, demand a financial asset. O less likely to save, that is, supply a financial asset. O more likely to save, that is, supply a financial asset. ??? ???. 2

Solution

Answer : When interest rate falls , people are : less likely to save , that is , demand a financial assets . Interest rates determine the amount of interest payments that savers will receive on their deposits. A lower interest rates will reduce the rewards of saving and will tend to discourage saving. If interest rates fall,  consumers substitute saving for spending. With very low interest rates, it has encouraged people to look for better yields by investing in the stock market or they buy bonds which increase the demand for financial assets .