Asked by Nicole Jamison on May 09, 2024
Verified
During and/or the recessions of 1990-91,2001,and 2007-2008:
A) consumption rate of consumers increased.
B) consumption and savings rates stayed the same.
C) savings rate increased.
D) consumers borrowed using credit cards.
Consumption Rate
The proportion of income or resources that is spent on consumption rather than saving.
Savings Rate
The proportion of disposable income that is saved rather than spent on consumption, typically expressed as a percentage.
Credit Cards
Financial instruments issued by banks or financial institutions that allow cardholders to borrow funds with which to pay for goods and services with the obligation to pay back the borrowed money, plus any applicable interest.
- Clarify the ideas behind savings, investment, and consumption.
- Assess how the availability of credit influences expenditure patterns.
Verified Answer
AV
Antonio VecchioMay 16, 2024
Final Answer :
C
Explanation :
During recessions, consumers tend to save more and spend less, as they are uncertain about their job security and future income. This results in an increase in the savings rate, as people try to build a financial cushion to prepare for any potential financial difficulties.
Learning Objectives
- Clarify the ideas behind savings, investment, and consumption.
- Assess how the availability of credit influences expenditure patterns.