Question

What is the formula for elasticity of savings with respect to interest rates?

Short answer

The formula for the elasticity of savings is$E=\frac{\%∆S}{\%∆I}$.

Step-by-step solution

Step 1. Elasticity of saving

The ratio of percentage change in saving quantity to percentage change in interest rate is known as elasticity of saving. In the financial market, the elasticity of saving is calculated.

Step 2. Formula

This formula can be used to describe the supply curve's shape. The formula is as follows:

Elasticity of saving$=\frac{\%changeinquantitysupply}{\%changeininterestrate}$

or$E=\frac{\%∆S}{\%∆I}$