An Explanation for the Low Saving Rate in the United

question 73

Multiple Choice

An explanation for the low saving rate in the United States consistent with the demonstration effect includes:

• A)relatively generous government assistance for the elderly and large down payments required for home purchases.
• B)households spending beyond their means to keep up with community standards.
• C)well-developed financial markets making it easy to borrow against home equity.
• D)large and persistent capital gains.

Understand the role of product differentiation in monopolistically competitive markets.

Identify market structures through graphical analysis.

Assess the short and long-run equilibrium conditions in monopolistically competitive markets.

Evaluate the economic implications of pricing strategies above marginal cost.

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Definitions:

Psychological Facts

refer to interesting and often surprising details or findings from the field of psychology about how people think, feel, and behave.

Valence

in psychology, refers to the intrinsic attractiveness (positive valence) or averseness (negative valence) of an event, object, or situation.

Importance

The quality of being significant or valuable in a particular context or to a particular individual or group.

Social Learning Theory

A theory that suggests that people can learn new behaviors and attitudes through observing the actions of others and the outcomes of those actions.