According to Friedman,the apparent conflict between cross-section data which shows a saving rate that varies with income group and time-series data which shows that the saving ratio over the past century is fairly constant is resolved by
A) pointing out that cross-section and time-series data are not comparable.
B) interpreting the low saving of poor people as due to the fact that they must buy necessities.
C) interpreting the high saving of rich people as due to the transitory nature of much income earned by the rich.
D) distinguished between a permanent marginal propensity to consume and a transitory marginal propensity to consume.
Correct Answer:
Verified
Q85: Standard life-cycle analysis predicts that a stock
Q86: Between 1984 and 1989,the S&P 500 index
Q87: The life-cycle hypothesis predicts there to be
Q88: In the permanent-income hypothesis incorporating rational expectations,the
Q89: When it is assumed that people desire
Q91: According to the life-cycle hypothesis,if the average
Q92: Households affected by a "liquidity constraint" have
Q93: Working with the life-cycle hypothesis,we find in
Q94: With a rise in the stock market,the
Q95: In the life-cycle hypothesis,a person who expects
Unlock this Answer For Free Now!
View this answer and more for free by performing one of the following actions
Scan the QR code to install the App and get 2 free unlocks
Unlock quizzes for free by uploading documents