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.
Answer:c
To arrive at the proper conclusion from the studies, we need to analyze the information provided. According to the report, when the bank interest rate is 1%, only 8% of wage earners believe it is worthwhile to keep money in a savings account. However, when the interest rate increases to 3%, the percentage increases to 36%.
The margin of error for both studies is stated as 4 percentage points. This means that the actual percentage of wage earners who believe it is worthwhile to keep money in a savings account at a 1% interest rate could range from 4% to 12%, and at a 3% interest rate, it could range from 32% to 40%.
Based on this information, we can conclude that increasing the interest rate from 1% to 3% will likely increase the number of persons saving money in a savings account. This conclusion is supported by the significant difference between the two percentages, along with the fact that the lower bound of the 3% interest rate is higher than the upper bound of the 1% interest rate.
Therefore, the proper conclusion from the studies is that increasing the interest rate will increase the number of persons saving money in a savings account. Hence, answer choice C is correct.