McqMate
| Q. |
Compared to the rich the poor save - |
| A. | A larger part of their income |
| B. | An equal part of their income |
| C. | A smaller part of their income |
| D. | All of their incomes |
| Answer» C. A smaller part of their income | |
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Explanation: A "subsistence" or necessary level of consumption produces differences in consumption growth rates across income levels. This implies that poor households have lower saving rates because they cannot "afford to save" after buying the necessities. Institutional and behavioral mechanism also leads to low levels of saving among the poor. |
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