Sarah and Diane are both billing clerks for the local trucking company earning $17,000 per year. Sarah is attending college, plans to graduate in one year and earn $55,000 as an economist. Diane is not in college or undergoing any specialized training and will have the same job next year. According to economic theory, which of the two individuals would tend to have a higher current savings rate?

Question

Quizplus · Accepted Answer

Diane is more likely to have a higher current savings rate because she does not anticipate a significant increase in income in the near future, unlike Sarah, who might be inclined to save less now in anticipation of her higher future income as an economist.

Sarah and Diane Are Both Billing Clerks for the Local