15 questions · 15 marks · ≈ 15 min
The table shows how household spending changes with income.
| income ($ per month) | spending ($ per month) |
|---|---|
| 3000 | 3150 |
| 3300 | 3375 |
| 3600 | 3500 |
| 3900 | 3825 |
| 4200 | 4050 |
| 4500 | 4275 |
What is the lowest level of income at which savings are positive?
Choose your answer
$3000
$3600
$3900
$4200
Banks decrease interest rates.
What is likely to be the effect of this on borrowing and saving?
| borrowing | saving | |
|---|---|---|
| A B C D | falls falls rises rises | falls rises falls rises |
Choose your answer
The table shows the weekly values of certain items for the average person in each group. In which group does the average person save the most?
| income ($) | spending ($) | borrowing ($) | ||
|---|---|---|---|---|
| A B C D | employed workers retired people school students unemployed | 500 150 25 200 | 400 140 30 300 | 50 0 5 100 |
Choose your answer
What is the most important factor that affects how much a family saves?
Choose your answer
the income of the family
the level of taxation
the rate of inflation
the reliability of banks
Which of the following factors typically encourages household spending?
Choose your answer
High interest rates
Low consumer confidence
Uncertain economic conditions
Seasonal sales and discounts
What may cause an individual to save a higher proportion of their income?
Choose your answer
a belief that the price of goods will rise in the future
a fall in the rate of interest paid by the country’s banks
a fear that income will fall in the future
a rise in the individual’s wish to enjoy higher consumption immediately
A musician has a choice of playing for an orchestra in either Germany or England. Which combination of incomes and cost of living is most likely to cause her to choose the German orchestra?
| Incomes and cost of living in Germany compared with those in England | |||
|---|---|---|---|
| pre-tax (gross) income | after-tax (net) income | cost of living | |
| A B C D | higher higher lower lower | higher lower higher higher | higher lower higher lower |
Choose your answer
What will cause the level of savings in an economy to rise?
Choose your answer
a fall in investment
a fall in real wages
a rise in income taxes
a rise in interest rates
What is most likely to encourage the immediate purchase of an expensive item such as a new car?
Choose your answer
anticipating a fall in the rate of inflation
expecting interest rates to fall
making it easier to obtain a loan
needing to plan for unexpected emergencies
The table shows the percentage (%) of income saved by different age groups.
| age (years) | 15–29 | 30–39 | 40–49 | 50–64 | 65+ |
|---|---|---|---|---|---|
| % of income saved | –30 | –5 | +15 | +30 | –10 |
What can be concluded from the table?
Choose your answer
Over the age range shown total savings equalled total dissavings.
The 15–29 age group has the lowest level of income.
The 50–64 age group saves the highest percentage of its income.
The 65+ age group has a lower income than the 30–39 age group.
The table shows how three people (X, Y and Z) spend their income.
| person X | person Y | person Z | |
|---|---|---|---|
| food, clothing and housing entertainment and leisure luxury goods | 35% 25% 40% | 50% 20% 30% | 20% 40% 40% |
For these three people, what is the most likely order of income, from highest income to lowest income?
Choose your answer
X → Y→ Z
Y → Z → X
Z → X → Y
Z → Y → X
The table shows how three people (X, Y and Z) spend their income.
| person X | person Y | person Z | |
|---|---|---|---|
| food, clothing and housing entertainment and leisure luxury goods | 30% 35% 35% | 25% 35% 40% | 50% 25% 25% |
For these three people, what is the most likely order of income, from lowest income to highest income?
Choose your answer
Y → X → Z
Y → Z → X
Z → X → Y
Z → Y → X
Which of the following factors would likely have a negative impact on household saving?
Choose your answer
An increase in disposable income due to a raise in the minimum wage
A decrease in interest rates on savings accounts
The introduction of a new tax incentive for retirement savings
A rise in consumer confidence leading to increased spending
What is the main impact of an increase in interest rates on household saving?
Choose your answer
Borrowing tends to increase because higher interest rates make borrowing less attractive.
Household saving remains unchanged as interest rates have no impact on saving behaviour
Household saving increases as higher interest rates provide greater incentives to save money
Household saving becomes volatile as interest rates have an unpredictable influence on saving patterns
What is likely to be a consequence of a significant increase in consumer credit availability on household spending?
Choose your answer
Decreased consumer confidence leading to reduced spending
Higher interest rates on existing loans, encouraging spending
A decrease in disposable income due to rising inflation
Increased spending in the short term, but potential long-term debt