Keynes's Theory of Consumption Predicts That the Aggregate Saving Rate

question 9

Multiple Choice

Keynes's theory of consumption predicts that the aggregate saving rate

• A) increases as society becomes richer.
• B) falls as society becomes richer.
• C) is constant in the long-run.
• D) falls with higher incomes in a cross-section of income.

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Definitions:

General Ledger

A comprehensive record of all financial transactions of a company, categorized into accounts.

Accounting Equation

A fundamental principle in accounting that states that assets equal liabilities plus equity (Assets = Liabilities + Equity), serving as the foundation for the balance sheet.

Current Ratio

A liquidity ratio that measures a company's ability to pay short-term obligations, calculated as current assets divided by current liabilities.

Short-term Obligations

Financial liabilities that are due for payment within one year.