A U.S. government report stated that, “With bank interest rates around
1.0%, 8% of wage earners believe it worthwhile to keep money in a
savings account. However, at 3.0% interest, 36% of wage earners believe
it worthwhile to keep money in a savings account. The margin of error
for both studies is 4 percentage points.”. A proper conclusion from the
studies is that:
A. increasing the interest rate from 1% to 3% will increase the number of
persons saving money in a savings account.
B. increasing the interest rate may well have no effect on the number of
persons saving money in a savings account.
C. increasing the interest rate will increase the number of persons saving
money in a savings account.
D. the interest rate difference between 1% and 3% may well have no effect
on the number of persons saving money in a savings account.
My answer is D, but I'm not sure
Assuming that the margin of 4.0% is for the depositors, at 1.0% depositors = 8 ± 4, while for 3.0%, depositors = 36 ± 4.
Is my assumption valid? If so, I disagree.
To determine the proper conclusion from the given studies, we need to analyze the information provided and consider the margin of error.
First, let's examine the findings from the studies:
- At a 1% interest rate, only 8% of wage earners find it worthwhile to keep money in a savings account.
- At a 3% interest rate, 36% of wage earners find it worthwhile to keep money in a savings account.
Based on this data, we can see that there is a significant increase in the percentage of wage earners who believe it worthwhile to keep money in a savings account when the interest rate increases from 1% to 3%. This suggests that increasing the interest rate has a positive impact on the number of persons saving money in a savings account.
However, it's essential to consider the margin of error mentioned in the report, which is 4 percentage points for both studies. This means that the actual percentages may vary within a range of plus or minus 4 percentage points.
Since the margin of error is relatively large, it is possible that the impact of the interest rate difference between 1% and 3% on the number of persons saving money in a savings account may have no effect. Therefore, the proper conclusion would be that the interest rate difference between 1% and 3% may well have no effect on the number of persons saving money in a savings account.
Hence, your answer of D is correct.