Refer to the following figure when answering the following questions.
Figure 16.4: Personal Saving Rate: 1990-2010
-Consider Figure 16.4. 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

Refer to the following figure when answering the following questions.
Figure 16.4: Personal Saving Rate: 1990-2010 
-Consider Figure 16.4. 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 saving money for future uncertainty or unexpected events. After 2007, there was a global financial crisis and people may have started saving more as a precautionary measure. This is a possible cause for the change in the saving rate.

Refer to the Following Figure When Answering the Following Questions