Suppose that Family A borrows money when its car breaks down and saves money when the wife receives a holiday bonus from her employer. Suppose that Family B borrows money to buy elaborate birthday presents for the children and spends the husband's holiday bonus on a vacation to Florida. Which of the following is correct?
A) Both Family A's and Family B's spending habits suggest that they base their purchasing decisions on transitory income.
B) Family A's spending habits suggest that it bases its purchasing decisions on transitory income rather than permanent income. Family B's spending habits suggest that it bases its purchasing decisions on permanent income rather than transitory income.
C) Family A's spending habits suggest that it bases its purchasing decisions on permanent income rather than transitory income. Family B's spending habits suggest that it bases its purchasing decisions on transitory income rather than permanent income.
D) Both Family A's and Family B's spending habits suggest that they base their purchasing decisions on permanent income.
Correct Answer:
Verified
Q354: A family's ability to buy goods and
Q355: The typical economic life cycle illustrates how
Q356: Because people can borrow when they are
Q357: The Smith family owns an apple orchard
Q358: A typical worker's normal or average income
Q360: Saving and borrowing is indicative of a
Q361: The study by economists Cox and Alm
Q362: Economists who study economic mobility have found
Q363: What percent of families are poor for
Q364: Economic mobility in the United States is
A)uncommon.
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