Which of the Following Hypotheses Is a Plausible Explanation for Why

question 16

Multiple Choice

Which of the following hypotheses is a plausible explanation for why U.S.households save so little?

• A)Government assistance to the elderly has reduced the need for life-cycling saving.
• B)Most American already own homes and, therefore, have less need for life-cycle saving.
• C)The highly developed financial markets in the U.S.have reduced the need for precautionary saving by Americans.
• D)Government assistance to low-income U.S.households has increased the demonstration effects on spending by the poor.

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Definitions:

Selling

The process of promoting and selling goods or services, including marketing and advertising strategies.

Administrative Expense

Expenses incurred in the process of running a company that are not directly tied to a specific product or service, such as salaries of senior executives.

Responsibility Accounting

A system of accountability in which managers are held responsible for those items of revenue and cost—and only those items—over which they can exert significant control. The managers are held responsible for differences between budgeted and actual results.

Significant Variances

Discrepancies between planned and actual figures that are large enough to warrant attention and possibly corrective action by management.