An increase in uncertainty about the future will tend to ________ precautionary saving and ________ the desired level of wealth for households.
A) increase; increase
B) increase; decrease
C) decrease; increase
D) decrease; decrease

Question

Quizplus · Accepted Answer

An increase in uncertainty about the future will tend to increase precautionary saving and increase the desired level of wealth for households. This is because households will want to save more in order to protect themselves against future risks, and they will also want to hold more wealth in order to feel more secure.

An Increase in Uncertainty About the Future Will Tend to ________