Liquidity constraints prevent people from engaging in consumption smoothing.

Name: Liquidity constraints prevent people from engaging in consumption smoothing.
Brand: Quizplus
Rating: 4.8 (33 reviews)

Question

Quizplus · Accepted Answer

Liquidity constraints can prevent individuals from accessing the funds necessary to smooth out their consumption over time. Without access to credit or savings, individuals may have to consume less during times of financial stress, which can lead to irregular consumption patterns and a lower overall standard of living.

Liquidity Constraints Prevent People from Engaging in Consumption Smoothing