________ is when households save to hedge against uncertainty.
A) Precautionary saving
B) Bond purchase strategy
C) Consumption smoothing
D) Utility maximization
E) Credit constraint

Question

Quizplus · Accepted Answer

Precautionary saving refers to the act of saving money in order to hedge against uncertain events such as job loss, health problems, or other unexpected expenses. This type of saving is driven by a desire to maintain a certain level of financial security in the face of uncertainty. Bond purchase strategy, consumption smoothing, utility maximization, and credit constraint are all distinct concepts that are not directly related to the act of saving for precautionary purposes.

________ Is When Households Save to Hedge Against Uncertainty