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The rate of DIRT is one factor which influences the level of personal savings - Leaving Cert Economics - Question b - 2015
Question b
The rate of DIRT is one factor which influences the level of personal savings. (i) What do the initials DIRT stand for? (ii) Explain the underlined term. (iii) St... show full transcript
Worked Solution & Example Answer:The rate of DIRT is one factor which influences the level of personal savings - Leaving Cert Economics - Question b - 2015
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State and explain two factors, other than the rate of DIRT, which may influence the level of savings of an individual.
Answer
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Interest Rates: If the interest rates offered by financial institutions are perceived as low, potential savers may feel discouraged to save since their returns will be minimal. Conversely, higher interest rates can motivate individuals to save more.
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Level of Inflation: High levels of inflation can erode the real value of savings as it reduces purchasing power. If inflation is anticipated to be high, individuals may prefer to spend rather than save, since the future value of their savings could diminish significantly.