For the following questions refer to Figure 15.3 below.
-Consider Figure 15.3.A possible cause for the change in the saving rate after,about,2007 is:
A)precautionary saving.
B)consumption smoothing.
C)a falling discount factor.
D)rising marginal utility of consumption.
E)the aging of the baby boomers.

Question

For the following questions refer to Figure 15.3 below. 
-Consider Figure 15.3.A possible cause for the change in the saving rate after,about,2007 is:
A)precautionary saving. 
B)consumption smoothing. 
C)a falling discount factor. 
D)rising marginal utility of consumption. 
E)the aging of the baby boomers.

Quizplus · Accepted Answer

Precautionary saving refers to an increase in saving due to uncertainty and heightened risk aversion. The financial crisis of 2008 created a great deal of uncertainty and may have led individuals to increase their precautionary saving, thus causing the observed change in the saving rate after 2007.

For the Following Questions Refer to Figure 15