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
Step 1
What do the initials DIRT stand for?
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Answer
The initials DIRT stand for Deposit Interest Retention Tax. It is a tax applied to the interest earned on deposits.
Step 2
Explain the underlined term.
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Answer
Savings refers to that part of a person’s income that is not spent. It is the amount set aside for future use, which can include building an emergency fund, investing, or saving for specific goals.
Step 3
State and explain two factors, other than the rate of DIRT, which may influence the level of savings of an individual.
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Answer
Interest Rates:
If the interest rates offered by financial institutions are low, individuals may feel less inclined to save since the returns on savings are minimal.
Conversely, if interest rates are high, it may encourage people to save more, as they can earn better returns on their deposits.
Income Levels:
The greater a person's income, the higher their ability to save. Higher income allows individuals to allocate a larger portion of their earnings towards savings after accounting for necessary living expenses.
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