1. The supply of saving Suppose that Ginny receives a pay raise of $1,100 per year. She can either use the extra money to consume goods and services, or she can save it by depositing it in a bank. For each of the alternative annual interest rates in the following table, indicate how much interest Ginny would earn per year on her annual raise if she saves it. (Note: Assume that no income taxes are deducted.) Interest Rate Interest Earned (Dollars) (Percent) (Dollars) 12 25 A lower interest rate gives Ginny V incentive to save. The following graph shows a variety of possible curves representing the supply of saving. The following graph shows a variety of possible curves representing the supply of saving. 25 B 20 .5 0| INTEREST RATE (Percent) a; o 20 40 so an 100 SAVING (Billions of dollars)