According to Say's law, in a money economy a reduction in consumption spending causes a shift of the saving curve and therefore a in the interest rate.

According to Say's law, in a money economy a reduction in consumption spending causes a Rightward shift of the saving curve and therefore a Decline in the interest rate.

Explanation:

The reason is that the supply of money in the market will grow because people will be saving more and start investing them. This results a rightwards shift of saving curve which is moving away from pivot point (0,0). This excess supply of money will lower the interest rate because greater the supply of the money the lower the interest rate.

advanced placement tests

the investment was $14,174.196

explanation:

a lump sum means that the father of the example made one deposit and leave it be.

we need to know the value of a capital that generated at 4.05% per year during 28 years the sum of $48,613.24

now clearing the formula to solve for capital we got:

and we reach the answer investment = $14,174.20