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.

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Definitions:

Clear

To finalize or settle a transaction or an obligation, especially in the context of financial transactions.

Disbursement Float

The time difference between the issuance of a payment and when the funds are actually debited from the payer’s account.

Cheques

A written, dated, and signed instrument that contains an unconditional order directing a bank to pay a definite sum of money to a payee.

Deposit

A sum of money placed or kept in a bank account, often to gain interest.