The theoretical model of the intertemporal budget constraint for the U.S. economy as a whole suggests that the most common pattern seems to be that:
A) the quantity of savings automatically adjusts to changes in the rate of return.
B) the quantity of savings doesn't adjust much to changes in the rate of return.
C) the result of a higher rate of return is a higher quantity of saving.
D) the result of a lower rate of return is a lower quantity of saving.

Question

Quizplus · Accepted Answer

The most common pattern observed in the U.S. economy is that the quantity of savings doesn't adjust much to changes in the rate of return. This suggests that factors other than the rate of return, such as income levels, consumption habits, and economic expectations, play a more significant role in determining the amount of savings.

The Theoretical Model of the Intertemporal Budget Constraint for the U.S